CD Indexes (Certificate of Deposit)
While the 12 month moving average of the 3 month CD is arguably more widely used today (this is called the CODI), the CD indexes as a group are calculated by averaging the interest rates on the Certificates of Deposit traded on the secondary marketing the USA. While there are 1 month, 3 month, 6 month CD and 1 year CD Index ARM Indexes, the 3 month and 6 month Indexes are the ones which are used by lenders the most as an index for setting the floor rate of an adjustable rate mortgage. The 6 month CD Index changes very rapidly compared to the CODI, because the 6 month CD Index is calculated monthly whereas the CODI Index averages the 3 month CD over a year.

To make a long story short, volatile ARM indexes such as the 6 month CD present borrowers with a lot of risk when rates are rising as they are currently, however can be good in a market where rates are falling quickly. If you are in a CD Index loan, 6 month CD Index or otherwise, refinancing into a fixed rate or into an ARM with a slower moving index is definitely something to consider.

CODI Certificate of Deposit Index
Like its closely linked counterpart, the MTA index, the Certificate of Deposit Index is a slow moving annual index which is much more stable than the CD Index or the Constant Maturity Treasury Index. The CODI is calculated by taking a 12 month average of the monthly yields on 3 month Certificate of Deposit rates, which are published nationally.

CODI Index ARM mortgages are similar in look in feel to MTA or MAT index ARM loans, and many feature payment options which borrowers who are seeking to refinance into a fixed rate feel they must give up when the convert. This is not necessarily the case anymore, as there are new mortgages available with up to 30 year fixed rate periods which offer cash flow minimum payment option choices just like a CODI Option ARM.