As the Cost of Funds Index moved lower, other adjustable-rate indices move in different directions.
COFIÂ fell to 1.663 percent in September based on data released Friday from the Federal Home Loan Bank of San Francisco. A month earlier, the index was 1.713 percent, while is was only 1.272 percent in September 2009.
The FHLB calculated September’s COFI using data from average total funds of $36.0 billion at member banks based in Arizona, California and Nevada.
From August to September, the yield on the one-year Treasury — a more widely used index for adjustable-rate mortgages — edged up to 0.27 percent from 0.25 percent, according to data from the U.S. Department of the Treasury. The one-year yield finished October, however, lower at 0.22 percent.
Mortgage behemoth Fannie Mae predicts that the one-year will average 0.40 percent during each quarter of 2010 then slowly rise during 2011 to end next year at 0.90 percent.
The six-month London Interbank Offered Rate is widely used on subprime ARMs. LIBORÂ moved to 0.46 percent in September from August’s 0.52 percent and was 0.45 percent at the end of October.
ARM share ended September at 6.0 percent, according to the Mortgage Bankers Association. ARMÂ share finished October at 5.3 percent.
Fannie projects that ARM share of applications will have been 6 percent in each of the last three quarters of 2010 then rise to 10 percent by the end of next year.
