What is an ARM index?

Adjustable Rate Mortgage (ARM) loans have an interest rate that can fluctuate based on the performance of an index. The index is a reference point for the interest rate and takes into account current market conditions. As the index figure moves up or down, the index values are updated in The Mortgage Office® and offered to our customers for download. 

Available indexes within The Mortgage Office®:

• 11th District Cost of Funds (COFI)
• CMT 1-Year (Daily, Weekly & Monthly)
• CMT 10-Year (Daily, Weekly & Monthly)
• CMT 2-Year (Daily, Weekly & Monthly)
• CMT 20-Year (Daily, Weekly & Monthly)
• CMT 3-Month (Daily, Weekly & Monthly)
• CMT 3-Year (Daily, Weekly & Monthly)
• CMT 5-Year (Daily, Weekly & Monthly)
• CMT 6-Month (Daily, Weekly & Monthly)
• CMT 7-Year (Daily, Weekly & Monthly)
• Royal Bank of Canada Prime Rate
• Secondary Market CD 1-Month (Daily, Weekly & Monthly)
• Secondary Market CD 3-Month (Daily, Weekly & Monthly)
• Secondary Market CD 6-Month (Daily, Weekly & Monthly)
• Secured Overnight Financing Rate (SOFR) (30/90/180 Day Avg)
• USD LIBOR - 1 month
• WSJ Prime Rate

Information about the indexes within The Mortgage Office®:

• 11th District Cost of Funds
  • The 11th District Cost of Funds Index (COFI) is a monthly weighted average of the interest rates paid on checking and savings accounts offered by financial institutions operating in Arizona, California, and Nevada. Published on the last day of each month, the COFI represents the cost of funds for western savings institutions that are members of Federal Home Loan Bank of San Francisco, a self-regulatory agency, and satisfy the Bank's criteria for inclusion in the index.
• CMT - Constant Maturity Treasury:
  • Published by the Federal Reserve Board, these indexes are the weekly or monthly average yields on U.S. Treasury securities adjusted to constant maturities. Yields on Treasury securities at "constant maturity" are interpolated by the U.S. Treasury from the daily yield curve, which is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market. The CMT indexes are volatile and move with the market. They reflect the state of the economy and respond quickly to economic changes.
• Royal Bank of Canada Prime Rate
  • RBC’s Prime Rate is the basis for its variable-rate lending products, like mortgages and lines of credit. When the Bank of Canada adjusts its overnight rate, RBC’s Prime Rate will increase or decrease by the same amount. First incorporated in 1869 as the Merchants’ Bank of Halifax, the Royal Bank of Canada (RBC) is one of the country’s Big Six banks and one of its most prominent mortgage lenders.
• Secondary Market CD:
  • The full name of this index is Weekly Certificate of Deposit Rates, Secondary Market and it is published by the Federal Reserve Board. It is often referred to in ARM disclosures as "Average of Dealer Offering Rates on Nationally Traded 6-Month Certificates of Deposit Averages of Daily Figures Secondary Market Percent Per Annum."
  • This index is defined as "An average of dealer offering rates on nationally traded certificates of deposit; annualized using a 360-day year or bank interest." These figures are available from the Federal Reserve Statistical Release H.15 (519) and reflect week-ending dates.
  • The CD indexes are averages of the secondary market interest rates on nationally traded Certificates of Deposit. The Certificates of Deposit, also known as CDs, are usually issued by banks and other financial institutions. They pay a fixed rate of interest for a specific period of time.  
  • The Certificates of Deposit of various maturities; including 1-Month, 3-Month, 6-Month and 1-Year, are used as ARM indexes. The 6-Month Certificate of Deposit (6-Mo CD) is the most popular of the CD indexes. The CD indexes are very volatile and are generally considered to react quickly to change in the market.
• Secured Overnight Financing Rate (SOFR): 
  • This is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities. The SOFR includes all trades in the Broad General Collateral Rate plus bilateral Treasury repurchase agreement (repo) transactions cleared through the Delivery-versus-Payment (DVP) service offered by the Fixed Income Clearing Corporation (FICC), which is filtered to remove a portion of transactions considered “specials”. Note that specials are repos for specific-issue collateral, which take place at cash-lending rates below those for general collateral repos because cash providers are willing to accept a lesser return on their cash in order to obtain a particular security.
  • The SOFR is calculated as a volume-weighted median of transaction-level tri-party repo data collected from the Bank of New York Mellon as well as GCF Repo transaction data and data on bilateral Treasury repo transactions cleared through FICC's DVP service, which are obtained from the U.S. Department of the Treasury’s Office of Financial Research (OFR). Each business day, the New York Fed publishes the SOFR on the New York Fed website at approximately 8:00 a.m. ET.
• USD LIBOR - 1 month:
  • Published by the Federal National Mortgage Association (FNMA), this index is widely used. The Fannie Mae LIBOR rates are determined from information that is available as of 11:00 AM (London Time) on the second to last business day of each month. Fannie Mae makes these rates available by the last business day of each month. LIBOR is an abbreviation for "London Interbank Offered Rate," and is the interest rate offered by a specific group of London banks for U.S. dollar deposits of a stated maturity.
• WSJ Prime Rate:
  • The initials stand for the Wall Street Journal, which surveys large banks and publishes the consensus prime rate. The Journal surveys the 30 largest banks, and when three-quarters of them (23) change, the Journal changes its rate, effective on the day the Journal publishes the new rate. It's the most widely quoted measure of the prime rate, which is the rate at which banks will lend money to their most-favored customers. The prime rate will move up or down in lock step with changes by the Federal Reserve Board.