Posted on: 03rd Oct, 2005 03:18 pm
Hi All,
Can anyone tell me how does a CODI loan work?
Regards
Can anyone tell me how does a CODI loan work?
Regards
Hi Gina,
CODI (Cost Of Deposit Index) is a twelve month moving average of the three month certificates of deposit index, as published by the Federal Reserve Board. When the interest rate resets, it adjusts to the current level of the index plus the pricing spread, similar to any adjustable-rate mortgage.
Unlike the prime rate or discount rate, rates on CODI loans don't rise or fall as rapidly as market interest rates. This is mainly due to the 12 month moving average which is offset by some higher and some lower CD yields.
A CODI loan is based on one of the most stable indexes currently available. It is the sum of what banks are paying to their depositors on their 3-month CD accounts. The overall index is calculated by using an average, of an average, of an average.
The process works somewhat like this: daily average is taken for these 3-month CDs and then those daily values are added together for one month. The sum is then divided by the number of days in the month to reach a monthly value. Finally, this current monthly value obtained is added to the previous 11 monthly values and the sum is divided by 12 to give the current CODI Index.
Hope you will benefit from this information.
Regards,
Jason
CODI (Cost Of Deposit Index) is a twelve month moving average of the three month certificates of deposit index, as published by the Federal Reserve Board. When the interest rate resets, it adjusts to the current level of the index plus the pricing spread, similar to any adjustable-rate mortgage.
Unlike the prime rate or discount rate, rates on CODI loans don't rise or fall as rapidly as market interest rates. This is mainly due to the 12 month moving average which is offset by some higher and some lower CD yields.
A CODI loan is based on one of the most stable indexes currently available. It is the sum of what banks are paying to their depositors on their 3-month CD accounts. The overall index is calculated by using an average, of an average, of an average.
The process works somewhat like this: daily average is taken for these 3-month CDs and then those daily values are added together for one month. The sum is then divided by the number of days in the month to reach a monthly value. Finally, this current monthly value obtained is added to the previous 11 monthly values and the sum is divided by 12 to give the current CODI Index.
Hope you will benefit from this information.
Regards,
Jason
CODI index is an annual average of rates and therefore it is very steady and do not react quickly to any changes in the market. Below we have provided you with a list of CODI rates over the last 12 months.
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Period | CODI Rate |
Jul 2005 | 2.6583 |
Aug 2005 | 2.8325 |
Sep 2005 | 3.000 |
Oct 2005 | 3.1742 |
Nov 2005 | 3.3450 |
Dec 2005 | 3.5117 |
Jan 2006 | 3.670 |
Feb 2006 | 3.836 |
Mar 2006 | 3.995 |
Apr 2006 | 4.157 |
May 2006 | 4.318 |
Jun 2006 | 4.482 |
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