Real Estate Terms Glossary
What is Cost of Funds Index (COFI)?
Cost of Funds Index (COFI), also known as 11th District Cost of Funds Index, is the monthly weighted average interest expense that reporting financial institutions pay on their borrowings, such as checking accounts. It’s a regional average of interest expenses that financial institutions incur.
Keep in mind that interest rates on COFI mortgages and loans fluctuate more slowly compared to variable-rate loans that are linked to other indices. Professionals use COFI as an index to adjust or change interest rates on ARMs (Adjustable Rate Mortgages).
Examples of Cost of Funds Index (COFI)
- Example 1: Federal cost of funds index
Here’s Investopedia’s definition of Cost of Funds Index (COFI).
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