Great Western Forms National Mortgage Index : Housing: The new formula is based on government borrowing rates. It may signal a move away from the current 11th District standard.

In what may signal a move away from the 11th District cost of funds index in calculating adjustable-rate mortgages, Great Western Bank said Monday that it has created a national mortgage index based on government borrowing rates.

The action by one of the nation’s largest home mortgage lenders comes amid a savings and loan industry shakeout that has wiped out hundreds of thrifts and made the survivors larger and more geographically diverse than ever before.

That national expansion is what warranted the new federal cost of funds index, said James Montgomery, chief executive of Beverly Hills-based Great Western.

“We are doing an awful lot of business outside of California. And looking out toward the future, it just seems that a national index makes a lot of sense,” Montgomery said.

Although Great Western will be the first lender to offer loans based on this index, it will be available to lenders nationwide. Several large banks and thrifts contacted Monday said they are considering offering loans based on the new formula but have not yet made any decisions.

Currently, about 90% of Great Western’s mortgage loans are pegged to the 11th District rate, which is based on the borrowing costs of S&Ls; in California, Arizona and Nevada. Great Western said it will not abandon loans based on the 11th District formula, but, starting March 25, it will offer the national index for those who prefer it.

The 11th District rate is the most common adjustable-rate mortgage index used in California, although nationwide it is second, following the one-year Treasury index, said Cheryl Regan, a spokeswoman with the Federal Home Loan Mortgage Corp., also known as Freddie Mac. Banks and thrifts also offer ARMs pegged to other indexes, including some based on the prime lending rate and rates on six-month certificates of deposit.

Montgomery said he believes the 11th District rate has been popular with both lenders and consumers because it adjusts slowly and faithfully tracks lender costs.

The new index, to be based on the rate the government pays to borrow through short- and medium-term Treasury securities, is similar, he added.