The Eleventh Federal Home Loan District Cost of Funds Index reversed course and headed downward again in March, nearly erasing a 3-basis-point rise in February.The index for March, as calculated by the Federal Home Loan Bank of San Francisco, stood at 1.815%; in February it was 1.841%. The March number is the second-lowest point the index has ever reached. The lowest came in January, when COFI stood at 1.811%. COFI is one of several indices popular for setting rates for adjustable-rate mortgages. Its proponents believe one of its benefits is that -- because it is a weighted average of the interest paid by thrifts in California, Arizona, and Nevada on money used to originate mortgages -- it lags other rates by three to six months. Meanwhile, with rates rising, a number of industry sources are reporting an increasing popularity of ARM loans in general.

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