Mortgage index,
Definition of Mortgage index:
An index applied to establish rates on adjustable rate mortgages (ARM). The three most commonly used indexes are the Constant Maturity Treasury CMT), the 11th District Cost of Funds Index (COFI) and the London Inter Bank Offering Rates (LIBOR). The same index is used to set the initial loan rate as well as the adjusted rates during the term of the loan.
A mortgage index is the benchmark interest rate an adjustable-rate mortgage's (ARM's) fully indexed interest rate is based on. An adjustable-rate mortgage's interest rate, a type of fully indexed interest rate, consists of an index value plus an ARM margin. The margin tends to be constant, but the index's value is variable. Several benchmark interest rates serve as mortgage indexes.
It is also known as an ARM Index.
Meaning of Mortgage index & Mortgage index Definition
