May Eleventh District COFI Sets Record Low

The Eleventh Federal Home Loan District Cost of Funds Index set a new record low in May at 0.951%, a 29 basis point decline from April. COFI has been used to index adjustable-rate mortgages because it tends to lag other interest rate movements by as much as three to six months.

The previous low was March’s 0.967%.

There were 16 members of the Federal Home Loan Bank of San Francisco which contributed data for the weighted average calculation of what it costs them to obtain funds to originate mortgage loans.

Total average funds used for May’s COFI were $34.7 billion while total interest expense was $27.5 million. In April, total average funds were $34.5 billion, while total interest expense was $27.9 million.

The movement in COFI is in stark contrast to the Freddie Mac Primary Mortgage Market Survey. It was in the May 2 survey that the 30-year fixed-rate loan had an average rate of 3.35%. By the May 30 survey, it was up to 3.81% and in the survey for June 27 it was up to 4.46%.