Cost of Funds Index Rate Drops Further

The Eleventh Federal Home Loan District Cost of Funds Index for October 2009 is plumbing new lows at 1.259%. This is a decline of a little over 11 basis points from September's 1.272%. There were 26 eligible member institutions of the Federal Home Loan Bank of San Francisco that reported the data used to calculate the Index. Average total funds used in the calculation were $90.2 billion while total interest expense was $94.7 million. Since the start of the year, COFI, which is used by some thrifts to index adjustable-rate mortgages, is down 120 basis points. In comparison, the Freddie Mac monthly Primary Mortgage Market Survey data for the one-year ARM shows the average commitment rate declining just 38 basis points between June, when the 4.93% average was 1 BP higher than in January, and October's 4.55%. According to Freddie Mac's data, the lowest monthly average rate recorded for the one-year ARM was in March 2004 at 3.41%.