Which index is also used for adjustable-rate mortgages aside from LIBOR?

The 11th District COFI, or the 11th District Cost of Funds Index, is indeed used for adjustable-rate mortgages as an alternative to LIBOR. This index is based on the cost of funds for savings institutions in the 11th Federal Reserve District, which includes areas like California and parts of Nevada and Arizona. Lenders may choose to use the 11th District COFI because it reflects local market conditions for borrowing, providing a more localized measure for interest rates.

This index is particularly beneficial for borrowers because it typically offers more stability compared to other indexes that can fluctuate more dramatically. Using this COFI helps lenders set rates that can align better with community financial conditions. Other indexes like the Prime Rate or SOFR may be used, but the 11th District COFI is specifically notable for its widespread application as an adjustable-rate mortgage index, particularly in certain regions.

In contrast, while the Prime Rate is commonly recognized, it is primarily tied to bank lending rates and may not directly correlate to the factors considered in adjustable-rate mortgages. The SOFR, which stands for Secured Overnight Financing Rate, is a newer benchmark, but its use is more aligned with short-term loans and may not be as prevalent in longer-term adjustable-rate products