COFI ARMs (Cost of Funds Index Mortgage & COFI Index History)
COFI ARMs

COFI ARM

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(Cost of Funds Index Adjustable Rate Mortgage) - the rate is normally fixed for a 3 month period (this initial rate is sometimes referred to as the teaser or start rate) after which your rate is based on the 11th district cost of funds index (COFI) which is added to a pre-determined margin (typically ranging between 2.25-3.00%) to arrive at the new monthly rate. This loan may also have periodic payment caps and therefore the potential for negative amortization. Ask what the margin, life cap and periodic caps of your ARM will be. (Also see anatomy of an ARM for additional information).

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The cost of funds index (COFI) is not an interest rate. It reflects the average interest paid by savings institutions for their various sources of funds over a specified period of time. Deposits in checking and savings accounts — including certificates of deposit, money market deposit accounts, transaction accounts, and passbook accounts — are the primary source of funds for most savings institutions. Other sources of funds include loans obtained through the credit programs of the Federal Home Loan Bank of San Francisco (known as "advances") and money borrowed from other financial institutions.

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In general, the COFI does not move up or down as rapidly as market interest rates (such as the prime rate, the discount rate, or Treasury bill rates) because many savings institutions rely on fixed rate deposits of medium- and long-term maturities as a primary source of funds. Since rates on these deposits are not affected by changing market interest rates until the deposit matures, the total interest expense paid by savings institutions in a particular month reflects, to a significant degree, interest rates that were prevalent in previous months or years.

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COFI History - (11th District Cost of Funds Index)

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2013	0.962	0.999	0.967	0.970	0.951	0.954	0.954
2012	1.224	1.206	1.163	1.140	1.118	1.116	1.094	1.069	1.038	1.011	1.000	1.071
2011	1.484	1.469	1.452	1.359	1.360	1.338	1.350	1.316	1.276	1.218	1.201	1.221
2010	1.786	1.614	1.859	1.825	1.791	1.797	1.753	1.713	1.663	1.654	1.571	1.508
2009	2.455	2.003	1.627	1.380	1.832	1.599	1.473	1.412	1.272	1.259	2.094	1.828
2008	3.970	3.560	3.280	3.111	2.918	2.829	2.698	2.693	2.769	3.125	3.155	2.757
2007	4.392	4.376	4.299	4.224	4.293	4.283	4.277	4.359	4.383	4.233	4.172	4.072
2006	3.347	3.604	3.624	3.759	3.884	4.09	4.177	4.277	4.382	4.346	4.358	4.396
2005	2.183	2.317	2.400	2.515	2.622	2.676	2.757	2.870	2.972	3.074	3.190	3.296
2004	1.811	1.841	1.815	1.802	1.708	1.758	1.816	1.875	1.931	1.960	2.025	2.118
2003	2.308	2.257	2.210	2.208	2.130	2.113	2.018	1.946	1.923	1.909	1.821	1.902
2002	2.823	2.744	2.653	2.723	2.772	2.847	2.821	2.763	2.759	2.708	2.537	2.375
2001	5.514	5.426	5.198	4.946	4.745	4.498	4.274	4.106	3.974	3.628	3.368	3.074
2000	4.901	4.967	5.002	5.078	5.196	5.357	5.456	5.509	5.548	5.589	5.607	5.617
1999	4.608	4.562	4.519	4.490	4.480	4.504	4.500	4.562	4.608	4.666	4.773	4.852
1998	4.987	4.968	4.917	4.903	4.881	4.881	4.911	4.899	4.882	4.762	4.691	4.655
1997	4.821	4.759	4.780	4.822	4.864	4.853	4.887	4.904	4.941	4.957	4.949	4.963
1996	5.033	4.975	4.874	4.841	4.823	4.809	4.819	4.839	4.834	4.839	4.835	4.842
1995	4.747	4.925	5.007	5.064	5.141	5.179	5.144	5.133	5.111	5.116	5.119	5.059
1994	3.710	3.687	3.629	3.672	3.726	3.804	3.860	3.945	4.039	4.187	4.367	4.589
1993	4.360	4.333	4.245	4.171	4.103	4.050	3.998	3.958	3.881	3.823	3.822	3.879
1992	6.002	5.800	5.611	5.427	5.290	5.258	5.069	4.874	4.805	4.597	4.508	4.432
1991	7.858	7.848	7.654	7.501	7.329	7.155	6.998	6.845	6.714	6.566	6.414	6.245
1990	8.369	8.403	8.258	8.211	8.171	8.086	8.109	8.075	8.091	8.050	8.044	7.963
1989	8.125	8.346	8.423	8.648	8.797	8.923	8.844	8.763	8.807	8.643	8.595	8.476
1988	7.615	7.647	7.509	7.519	7.497	7.618	7.593	7.659	7.847	7.828	7.914	8.022
1987	7.396	7.448	7.314	7.245	7.223	7.274	7.275	7.277	7.394	7.444	7.562	7.645
1986	8.770	8.964	8.744	8.587	8.441	8.374	8.196	8.018	7.901	7.717	7.602	7.509
1985	10.217	10.160	9.976	9.872	9.704	9.565	9.365	9.273	9.129	9.027	9.036	8.867

The Cost of Funds Index is considered by many to be the least volatile index. Therefore the COFI ARM is often preferred by savvy borrowers.

As mentioned above an excellent source for information on the Eleventh District Cost of Funds Index is Federal Home Loan Bank of San Francisco. The monthly COFI reflects the actual interest expenses recognized during a given month by all savings institution members of the Federal Home Loan Bank of San Francisco (Bank).

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