The cost of money for west coast savings institutions fell to its lowest point in decades, bringing down the index that many adjustable rate mortgages (ARM's) are tied to.
According to the Federal Home Loan Bank of San Francisco, the monthly weighted average cost of funds index (COFI) for savings institutions in the 11th District fell to 2.537% in November, down from 2.708% in October. A year ago, the index stood at 3.368%.
The index value is announced around 30 days following the end of each month.
With this latest drop, the COFI stands at its lowest level in decades.
The monthly COFI reflects the actual interest expenses recognized during a given month by all member savings institutions headquartered in Arizona, California, and Nevada.
Last week, mortgage giant Freddie Mac reported that the average one-year Treasury-indexed ARM fell to a record low 4.01%. The Mortgage Bankers Association of America reported that ARM applications represented only 13.3% of all mortgage applications.