COFI Meaning and
Definition
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COFI is an acronym that stands for Constant Maturity One-Year Treasury (index) and is a benchmark used to determine interest rates on adjustable-rate mortgages (ARMs) in the United States. It represents the average yield on U.S. Treasury securities with a one-year constant maturity and is commonly used as a reference rate for ARMs.
The COFI is calculated by averaging the monthly values of Treasury yields over a one-year period. This index is administered by the Federal Home Loan Bank of San Francisco and is widely followed by lenders and borrowers in the mortgage market. It is considered a reliable indicator of interest rate movement as it reflects changes in market conditions and the cost of borrowing for financial institutions.
The COFI index is determined by factors such as overall economic conditions, inflation expectations, and monetary policy decisions made by the Federal Reserve. When the COFI increases, it indicates that interest rates on ARMs will also rise, resulting in higher monthly mortgage payments for borrowers. Conversely, when the COFI decreases, borrowers may benefit from lower interest rates and reduced mortgage payments.
In conclusion, COFI is an abbreviation for Constant Maturity One-Year Treasury, which serves as a reference index for adjustable-rate mortgages in the U.S., reflecting changes in interest rates based on the average yield of U.S. Treasury securities over a one-year period.
Common Misspellings for COFI
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- CmFI
- CnFI
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