Monthly average cost of borrowings reported by members of the Federal Home Loan Bank system, calculated on either a national or regional basis. The COF is one of the indexes that a lender can use to determine the rate adjustments on ARM loans.
The interest rate at which a lender (i.e. a Bank) borrows money in the open money markets.
The interest rate you will be charged on the money lent to you (usually expressed in amount over bank base rate).
Interest rate associated with borrowing money.
the cost of borrowing money (the interest rate)
These ARMs are indexed to the actual costs of what banks pay to borrow money. Rates can adjust every month, six months, or every year.