Because the CODI index is a 12-month moving average, it is not as volatile as some other popular mortgage indexes such as the one-month LIBOR index. It tends to lag other mortgage indexes in the rate at which it adjusts when interest rates change.
Some mortgages, such as payment option ARMs, offer the borrower a choice of indexes. This choice should be made with some analysis. The interest rate on an adjustable-rate mortgage is known as the fully indexed interest rate - it equals the index value plus the margin. While the index is variable, the margin is fixed for the life of the mortgage. When considering which index is most economical, don't forget about the margin. The lower an index is relative to another index, the higher the margin is likely to be.