The Cost of Funds Index for savings institutions in the 11th Federal Home Loan Bank district is expected to rise to 4.892% for August, from 4.887% in July, according to traders at eight firms surveyed by Bloomberg News.

Their estimates ranged from 4.872% to 4.912%.

The Cost of Funds Index measures the interest paid by thrifts in the district on deposits, advances from the Federal Home Loan Bank, and more costly purchases of short-term funds. It is also used as a base rate for West Coast mortgages and for bonds backed by those loans.

A rise in the index, called Cofi, diminishes disposable cash of homeowners with adjustable-rate mortgages by increasing their monthly mortgage payments. For bondholders, a rise in the index increases the coupon rate on their adjustable-rate mortgage securities.

The San Francisco Home Loan Bank releases the index at 3 p.m. Pacific time on the last business day of every month. The August index will be in effect through October.

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