FHLB Index Hits New Low

It is a new low point for the Eleventh Federal Home Loan Bank District Cost of Funds Index, which for September 2009 fell 14 basis points to 1.272%. The previous low was recorded in April at 1.380%. The decline in COFI has moderated in the past five months. In the period between November 2008 and April 2009, it fell 177.5 basis points. Between May and September, the index fell just 56 basis points. The COFI is computed from the actual interest expense reported for a given month by the Arizona, California, and Nevada savings institutions members of the Federal Home Loan Bank of San Francisco. That includes the cost of deposits. Deposit interest rates might be at record lows. The average secondary market rate for one-month certificates of deposits is at an all-time low for September at 0.21%, the sixth month in a row of declines. Last October, a run up in this rate peaked at 4.04%. The secondary market rate for the three-month is 0.25% and for the six-month CD is 0.36%.