The Cost of Funds Index fell for the third consecutive month.
The index was 4.072% during December, according to the 11th District Federal Home Loan Bank of San Francisco. COFI was down from 4.172% in November and has fallen each month since September -- when it stood at 4.383%.
COFI, which is report about 30 days following the end of each month, was 4.396% in December 2006, according the data.
The index is calculated based on the weighted average interest expense of 11th District members headquartered in Arizona, California, and Nevada. For the latest month, $400.5 billion in average total funds were used in the calculation.
COFI is used as an index for adjustable-rate mortgages, which the Mortgage Bankers Association said accounted for just 8.6% of loan applications tracked in its survey for the week ending Jan. 25.
Other ARM indices include the 6-month London Interbank Offered Rate, or LIBOR, which Bankrate.com reported fell 142 basis points from a month earlier to 3.18% on Jan. 30, and the 1-year Treasury, which yielded 2.11% yesterday, down from 3.34% on Dec. 31, according to U.S. Treasury data.