While rising fixed rates have left the refinance market decimated, the 11th District Cost of Funds Index (COFI) has fallen again to its lowest point in decades.
According to the monthly press release from the Federal Home Loan Bank of San Francisco, COFI fell nearly ten basis points in July from the prior month to 2.018%. A year ago, the index was reported at 2.821%.
The weighted average index, which reflects the actual monthly interest expenses for savings institutions headquartered in Arizona, California, and Nevada, is reported approximately 30 days following the end of each month. For July, the average total funds used in the calculation of COFI was $370.1 billion.
Last week, Freddie Mac reported in its Primary Mortgage Market Survey that the average 1-year Treasury-indexed adjustable rate mortgages (ARM) was 3.88%.
Freddie reported that the average 30-year fixed rate mortgage was 6.32%, up from a low of 5.21% reached in June. This spike in fixed rates has wiped out much of the record refinance activity the industry has seen recently. At the same time, ARMs are picking up market share; last week, the Mortgage Bankers Association of America reported that ARM applications represented about a quarter of all applications, nearly double the level a year ago.