COFI Drops Below 3%

The Eleventh Federal Home Loan Bank Cost of Funds Index has fallen below 3% for the first time since September 2005. The index for May 2008 is 2.918%, a decline of over 19 basis points from 3.111% in April. Back in September 2005, the index stood at 2.972%, on its way to a peak of 4.396% in December 2006. Since September 2007, when COFI reached its latest high point of 4.383%, the index has fallen over 146 bps in a nine-month period. For comparative purposes, the one-month certificate of deposit secondary-market rate (collected by the Federal Reserve Bank of St. Louis) stood at 5.51% in August 2007. The most recent data, posted on May 1, had the rate at 2.50%. During that same period, the three-month CD rate fell from 5.49% to 2.66%, and the six-month CD fell from 5.40% to 2.84%.