The Eleventh Federal Home Loan District Cost of Funds Index declined another 7 basis points in April, falling from 4.299% for March to 4.224%.Since December 2006, when COFI peaked at 4.396%, the index has declined 17 bps. Because of the way it is calculated, COFI is a lagging index, reflecting changes in the market that might have taken place three to six months earlier. In the past four weeks, the Freddie Mac Primary Mortgage Market Survey has reported large increases in three of the rates it tracks. The average rate for the 30-year fixed-rate mortgage went up 27 bps from the week ended May 10 to the week ended May 31. In the same period, the average rate on the 15-year fixed-rate mortgage rose 25 bps and the 5/1 adjustable-rate mortgage rate was up 30 bps. But the one-year ARM rose from 5.42% for the week ended May 3 to 5.64% for the week ended May 24 before falling by 7 bps in the May 31 survey. It should also be noted that the Federal Reserve Board has not raised the federal funds rate in some time, and declined to do so at its most recent meeting. The FHLBank can be found online at http://www.fhlbsf.com.

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