Defying most other adjustable-rate mortgage indices, the cost of funds index continued its descent -- falling to its lowest level in nearly three years.
COFI was 2.918% in May, the Federal Home Loan Bank of San Francisco reported yesterday. The index fell from 3.111% in April and 4.293% during May 2007.
The last time the index was this low was in August 2005 -- when it stood at 2.870%, according to FHLBank San Francisco data.
COFI is calculated based on interest expenses for 11th District member institutions headquartered in Arizona, California and Nevada. Average total funds used in May's calculation were $404.9 billion.
Another index used for ARMs is the 1-year Treasury yield, which was 2.36% yesterday, according to data reported by the U.S. Treasury Department. The 1-year yield ended May at 2.22%.
The 6-month London Interbank Offered Rate, which is also used as an ARM index, was 3.19% as of June 25, Bankrate.com reported. LIBOR stood at 2.90% a month earlier.
The Mortgage Bankers Association reported that ARMs accounted for 9% of applications tracked in its Weekly Mortgage Applications Survey for the week ending June 20, off fractionally from a month earlier.