The Eleventh Federal Home Loan District Cost of Funds Index for November 2004 stood at 2.025%, marking the first time since July 2003 the index has been above 2%.The increase is a rise of 6.5 basis points from 1.960% in October 2004, according to the Federal Home Loan Bank of San Francisco. It is quite likely that COFI will continue to rise in the coming months. The index is a weighted average calculation of the cost of mortgage money for thrifts in Arizona, California, and Nevada, and one source of mortgage money is deposits. According to the Federal Reserve Bank of St. Louis, the secondary-market rate for the one-month certificate of deposit, which bottomed out at 1.03% as of Feb. 1, 2004, stood at 2.09% at the start of November. COFI, in contrast, bottomed at 1.708% in May, and has increased by only 31 bps since then. Because it is a weighted average, COFI generally lags other rates by three to six months.

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