The Cost of Funds Index fell to its lowest level in nearly two years and sits within 2 basis points of its all-time low.
COFI, which is used to determine rate changes on adjustable-rate mortgages, was 1.276 percent during September. The index fell from the previous month’s 1.316 percent.
The last time COFIÂ was this low was in October 2009, when it stood at 1.259 percent — its lowest level on record based on data reported by the Federal Home Loan Bank of San Francisco.
The index was 1.663 percent in September 2010.
COFIÂ is determined based on interest expenses at 11th District FHLB members based in Arizona, California and Nevada. Last month’s index was calculated determined on $35.7 billion in average total funds.
Like COFI, the yield on the one-year Treasury note is used as an ARM index. However, the one-year ARM is far more widely used.
As of Sept. 30, the one-year Treasury yield was 0.13 percent, rising from 0.10 percent as of Aug. 31, according to data reported by the Department of the Treasury. But the one-year slipped back to 0.12 percent as of the end of October.
ARMs accounted for 5.92 percent of all activity in the U.S. Mortgage Market Index report from Mortech Inc. and MortgageDaily.com for the week ended Oct. 28.
