The Eleventh Federal Home Loan District Cost of Funds Index was virtually flat in July compared with June at 0.954%. In May, the index, a weighted average calculation of the cost of funding mortgages for Federal Home Loan Bank of San Francisco member thrifts in California, Arizona and Nevada, was at 0.951%,
Because of the nature of the calculation, COFI is known as a lagging index, and thus reflects other interest rate movements between three and six months later. That is what has made this index popular with some adjusted-rate mortgage lenders and borrowers, especially in
The July calculation used total average funds of $35 billion and total interest expense of $27.8 million. For June, those numbers were $34.9 billion and $27.7 million, respectively.
For comparative purposes, the monthly average for the 30-year fixed rate mortgage, according to Freddie Mac’s Primary Mortgage Market Survey, has gone from 3.45% in April to 4.37% in July and 4.46% for August.
The movement on the one-year ARM has been less steady, going from 2.63% in April down to 2.55% in May, back up to 2.6% in June. It then moved up to 2.66% in July before falling back to 2.65% in August.
