COFI ARM Rate Drops to Lowest Point Since '04

The 11th District Federal Home Loan District Cost of Funds Index has lost 115 basis points in three months, bringing the rate for COFI-indexed adjustable-rate mortgages to a low not seen since October 2004. The index for February 2009, as calculated by the Federal Home Loan Bank of San Francisco, is 2.003%. This marks a decline of 45 basis points from January and the second largest decline in the index's history. It comes after drops of nearly 40 basis points between November and December and 30 basis points between December and January. In comparison, the monthly average interest rate for the one-year ARMs as measured by the Freddie Mac Primary Mortgage Market Survey declined from 5.26% in November 2008 to 4.86% in March. For the 30-year fixed-rate mortgages tracked by Freddie, the monthly average interest rate has gone from 6.48% in August 2008 to 5.00% in March. COFI generally lags movements in other rates. It has not been this low since October 2004, when it was at 1.960%. COFI set its all-time low of 1.708% in May 2004.