Cost Of Funds Index

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Definition: Cost Of Funds Index



Full Definition of Cost Of Funds Index


There are several cost of funds indexes published. The most widely used is a monthly index published by the Federal Home Loan Bank of San Francisco (FHLBSF). It is called the 11th District Monthly Weighted Average Cost of Funds Index (COFI). It is one of several indices used by mortgage lenders to set the floating interest rate on adjustable-rate mortgages. It reflects the average rate of interest paid for funding by savings & loan institutions in the 11th District. Deposits are a primary source of these institutions’ funds. Others include loans obtained through the credit programs of the FHLBSF and money borrowed from other financial institutions.

Depository institutions use swaps, caps or floors linked to COFI to hedge their funding costs. Because there is a lag between changes in market interest rates and changes in the average cost of funds to savings & loans, COFI tends to lag market interest rates.

Other COFI indices include a semi-annual index also published by the FHLBSF and indices published by the Federal Home Loan Mortgage Corporation and the Office of Thrift Supervision.


Synonyms For Cost Of Funds Index


COFI

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Definition Sources


Definitions for Cost Of Funds Index are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 16th April, 2020 | 7 Views.