Cost Of Savings Index (COSI Index)

A Cost of Savings Index (COSI) is a  popular index used for certain adjustable-rate mortgages (ARMs). The index is a weighted average of the rates of interest on the deposit accounts (sometimes called cost of savings) of the federally insured depository institution subsidiaries of Golden West Financial Corporation (GDW). These subsidiaries currently operate under the name World Savings.

GDW computes the COSI on the last day of each calendar month and announces it on or near the last business day prior to the fifteenth day of the following calendar month.

The COSI index is a stable index. Historically, it is not as volatile as some other popular mortgage indexes, such as the one-month LIBOR index. It also tends to lag other mortgage indexes when it comes to adjusting to changes in interest rates. When it comes to mortgages, often a COSI loan may offer enticing flexibility and payment options. 

According to the Mortgage Refinance Organization, "many COSI-indexed ARMs often have minimum payment change caps as well as lifetime interest rate caps but no periodic interest rate caps creating the possibility for negative amortization."

Wells Fargo offers the Wells COSI that is based on the interest rates depository subsidiaries of Wells Fargo & Company pay to individuals on certificates of deposit (CDs), also known as personal time deposits, according to the Wells Fargo website. The index is calculated using the weighted average of all the interest rates paid on CDs held by individual depositors as of the last business day of each month. The index is calculated monthly and is used to determine the interest rate on your mortgage. As of August 2018, the current value was .45 percent.