The Eleventh Federal Home District Loan Cost of Funds reached another new low as it fell by over two basis points between August and September.The new index is 1.923%, as compiled by the Federal Home Loan Bank of San Francisco as a weighted average of the cost of mortgage origination money for its members in Arizona, California and Nevada. In August, the index was 1.946%, the first time ever the index had been below the 2% mark. Since one source of mortgage money for banks and thrifts is deposits, some trends may be discerned from looking at those interest rates. While there was little or no drop in the rates on the one month, three month and six month certificates of deposit between April and May (six months ago, the long end of the typical lag between rates and COFI), a huge drop took place between May and June (nearly 20 basis points in all three), according to data compiled by the Federal Reserve Bank of St. Louis. The rates then rebounded slightly the rest of the summer but between August and September remained unchanged in all three categories.
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According to the Federal Reserve Board's latest financial stability report, persistent inflation and policy uncertainty are the primary worries for banks. Survey respondents expressed heightened anxiety over murky policy outlooks due to geopolitical turmoil and rapidly approaching domestic elections.
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The mortgage subsidiary of Hilltop Holdings posted another quarterly loss and volume slipped, but management also sees signs of optimism.
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The increasing frequency and severity of droughts was top of mind for panelists at AmeriCatalyst's "Going to Extremes" conference Thursday.
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