COFI Jumps

For the second consecutive month, there has been a double-digit increase in the Eleventh Federal Home Loan District Cost of Funds Index.The index, as computed by the Federal Home Loan Bank of San Francisco, stood at 2.622% for May, up almost 11 basis points from 2.515% in April. From March to April there was an 11.5-bp increase in the index. Looking at the Freddie Mac Primary Mortgage Market Survey data for the last few months illustrates the conundrum that Federal Reserve Board Chairman Alan Greenspan has referred to. The PMMS for the last week of each of the last four months show the average rate for the one-year adjustable-rate mortgage languishing. On March 31, it was 4.33%, before falling to 4.21% on April 28 and May 26. The most recent survey, June 30, put it at 4.24%. Meanwhile, the average for the 30-year fixed-rate loan on those same dates fell from 6.04% to 5.78% to 5.65% to 5.53%. Both COFI and the one-year Treasury-indexed ARM are more affected by the actions of the Federal Reserve than are long-term rates.