COFI Ends 28-Month Ascent

For the first time since May 2004, the Eleventh Federal Home Loan District Cost of Funds Index has declined on a month-to-month basis.The index, as calculated by the Federal Home Loan Bank of San Francisco, stood at 4.346% for October, down slightly less than 4 basis points from 4.382% in September. COFI is traditionally a lagging indicator, some three to six months behind, and many other rates have been declining in recent months. The Federal Reserve Board has not taken any action on the federal funds rate since August. From trough to peak, COFI increased only 267 bps, while the Fed raised rates 425 basis points. But Freddie Mac's primary mortgage market survey showed that the rate for one-year adjustable-rate mortgages had increased only 238 bps when it reached its peak in July of this year.