COFI Drops Below 4%

The Eleventh Federal Home Loan District Cost of Funds Index stood at 3.970% in January, a 10-basis-point decline from 4.072% in December. The decline puts the index below the 4% level for the first time since May 2006, when it stood at 3.884%. The following month it jumped 2 bps and continued to rise until peaking at 4.996% in December 2006. In comparison, the monthly average commitment rate for the one-year adjustable-rate mortgage (as measured by the Freddie Mac Primary Mortgage Market Survey) was 5.23% in January, its lowest point since January 2006. For the 30-year fixed-rate mortgage it stood at 5.76%, its lowest level since September 2005. But the monthly numbers don't tell the whole story. The weekly results for the one-year ARM averaged between 4.98% and 5.05% for the five weeks starting Jan. 24, before rising to 5.11% in the most recent survey. The rise of the 30-year fixed-rate mortgage has been sharper, with the average climbing 76 bps since the week of Jan. 24 to 6.24% in the most recent survey.