The Eleventh Federal Home Loan District Cost of Funds Index reached 1% in November, the all-time low for the series. In October, the index was 1.011%.
COFI’s high point in 2012 was in January, when the index was at 1.224%. While that number in itself was not a record low point, in every other month in 2012, COFI set a new low.
And it is possible for the index, which is a weighted average calculation of the money needed for Federal Home Loan Bank of San Francisco members to fund mortgage originations, to go even lower, said a spokeswoman for the bank.
For the November calculation 16 members contributed data. They had total average funds of $38.4 billion and total interest expense of $29 million.
Some lenders use COFI as an index for adjustable-rate mortgages because the calculation turns it into a lagging indicator, and therefore tends to move three to six months behind other indices. This is supposed to smooth out rate increases or declines.
In comparison, the monthly average commitment rate in the Freddie Mac Primary Mortgage Market Survey for both November and December for the 30-year fixed rate mortgage was a record low 3.35%. This index moved downward starting in July 2011, but increased six basis points in March 2012 and five basis points in August 2012.