FHLB Cost of Funds Index Falls Further

The Eleventh Federal Home Loan District Cost of Funds Index declined by four basis points between December 2009 and January 2010 as it continues to seek its new normal level following the disruption in the November calculation. For January, COFI is 1.786%, compared with December's 1.828%, according to the Federal Home Loan Bank of San Francisco. In November, Wachovia Mortgage FSB was removed as a contributor to the Index, which is calculated using data from the eligible thrift members of the FHLB-SF. As a result, there was a spike in COFI for November. The total average funds for the January calculation is $34.7 billion, while the total interest expense is $55.7 million. Both figures are in line with the data used to make the November and December calculations. When compared with January 2009, COFI is 67 basis points lower; at its lowest point during 2009 in October, the Index was 120 bps lower than in January. For comparative purposes, the Freddie Mac Primary Mortgage Market survey found the average 30-year fixed rate mortgage rate for January 2010 is only 2 bps under January 2009 and the lowest it fell to for the year was only 24 bps below the start of the year in April. For the one-year adjustable, the January 2010 rate is 59 bps lower than one year prior, a 2 bps increase over the lowest point recorded in 2009, for December.