The cost of funds index has fallen to its lowest level since 2005.
The index was 3.111% in April, the Federal Home Loan Bank of San Francisco reported today. The index was down from 3.280% in March and 4.224% during April 2007.
COFI hasn't been this low since October 2005 -- when it stood at 3.074%, according to FHLB data.
COFI is calculated based on interest expenses for FHLBank San Francisco member institutions headquartered in Arizona, California and Nevada. Average total funds used in April's calculation were $407.4 billion.
COFI is used as an index for adjustable-rate mortgages, which accounted for 9% of applications tracked in the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending May 23.
Another ARM index is the 1-year Treasury yield, which stood at 2.22% today, higher than 1.85% on April 30, according to data provided by the U.S. Treasury.
The 6-month London Interbank Offered Rate, which is also used as an index for ARMs, was 2.85% on May 28, Bankrate.com reported. On April 29, LIBOR stood at 2.99%.