The Cost of Savings Index (COSI) is an index used to determine adjustments to the interest rate on ARMs (adjustable rate mortgages). COSI is considered to be one of the most stable indices in the industry. The index adjusts monthly and is derived from money that is received by World Savings from consumers in the form of deposits and then lends the money in the form of mortgages and other loans. The interest rates in effect on these deposits are the basis for the COSI index.

World Savings receives money from consumers in the form of deposits and lends money as home or other loans. The interest rates in effect on these deposits are the basis for the COSI index. It is not based on actual interest paid, but rather the weighted annualized average of all interest rates in effect on World Savings deposit accounts on the last day of each month.

The Cost of Savings Index is known for being a rather stable index, meaning less rapid upward and downward movement. Conversely, an index such as the LIBOR (London InterBank Offering Rate) has shown to be much more volatile with sharper up and down movements.

The COSI is not based on actual interest paid on deposit accounts, but rather on a weighted annualized rate of all interest rates in effect on deposit accounts as of the last day of each month.

 

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