In a bit of irony, on the same day the Federal Reserve Board hiked its benchmark target rate by 25 basis points, the Federal Home Loan Bank of San Francisco announced that the Eleventh Federal Home Loan District Cost of Funds Index has reached a new low.For May, COFI was 1.708%, down 10 basis points from April's 1.802%. The Fed's action will have some effect on COFI, as it is a weighted average of the interest paid for money used to originate mortgages by thrifts in Arizona, California, and Nevada. However, because of the weighted average feature, the effect will not be fully felt by borrowers whose adjustable-rate mortgage loans are indexed to COFI until three to six months down the line.

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