The cost of funds index fell to its lowest level in more than two years.
In February, COFI was 3.560%, the Federal Home Loan Bank of San Francisco reported today. The index was lower than 3.97% during January and 4.376% in February 2007.
COFI has fallen each of the past five months and is at its lowest level since January 2006, when it stood at 3.347%, according to FHLB data.
The index is calculated based on interest expenses for 11th District FHLB member institutions headquartered in Arizona, California and Nevada. For February, $404.5 billion in average total funds were used in the calculation of COFI.
Two other indices used for adjustable-rate mortgages are the 1-year Treasury, which yielded 1.55% as of today, according to U.S. Treasury data, and the 6-month London Interbank Offered Rate, which Bankrate.com reported at 2.63% as of March 26.
ARMs accounted for less than 4% of total applications tracked in the latest weekly Mortgage Bankers Association weekly survey.