The 11th District Cost of Funds Index (COFI) is an interest rate index that is often used as a benchmark for adjustable-rate mortgages (ARMs). It represents the weighted average of the interest rates paid by financial institutions (such as banks and savings associations) on their sources of funds, primarily deposits and borrowings.

Key points about the 11th District Cost of Funds Index (COFI):

1. **Calculation:** The COFI is calculated by the Federal Home Loan Bank of San Francisco (FHLBank San Francisco). It reflects the average interest expenses of financial institutions in the 11th Federal Home Loan Bank District, which includes California, Nevada, and Arizona.

2. **Weighted Average:** The index is a weighted average, meaning that larger institutions have a more significant impact on the index value. It takes into account interest paid on various sources of funds, including savings accounts, certificates of deposit, and borrowings.

3. **Adjustable-Rate Mortgages (ARMs):** The COFI is often used as a benchmark for certain types of ARMs. Mortgage lenders may use the COFI as the basis for determining the interest rate adjustments on these loans. Borrowers with COFI-based ARMs may see changes in their interest rates as the COFI fluctuates.

4. **Publication:** The Federal Home Loan Bank of San Francisco publishes the COFI on a monthly basis. The published rates are typically available with a one-month lag.

5. **Alternative to Other Indexes:** While the most common benchmark for ARMs is the London Interbank Offered Rate (LIBOR), the COFI provides an alternative for borrowers and lenders, particularly those in the western United States.

It’s important for borrowers with COFI-based ARMs to understand how the index works and how changes in the index can affect their mortgage interest rates. Additionally, borrowers should carefully review the terms of their mortgage agreement to understand how often and by how much their interest rates can adjust based on changes in the COFI. If you have a mortgage tied to the 11th District COFI, it’s advisable to consult with your lender or a financial advisor to understand the potential impact of interest rate changes on your loan.