COFI Unchanged in June

The Eleventh Federal Home Loan Bank Cost of Funds Index was 4.881% in June, unchanged from where it was in May. This ends the downward trend of the index since the start of the year.The index reflects the interest paid by savings institutions in California, Arizona, and Nevada on their sources of mortgage money. Lenders use COFI to index adjustable-rate mortgage products, and they promote it as a less volatile index. However, the Freddie Mac Primary Mortgage Market Survey found the monthly average commitment rate for the one-year ARM for June to be 5.69% for the second straight month. In fact, in the four months since March, the PMMS has found the one-year ARM commitment rate to be very stable (5.69%, 5.67%, 5.69%, and 5.69%). Unlike COFI, the average rate tracked by the PMMS is higher than it was at the beginning of 1998, when it stood at 5.54%.