Just when it looked like the Cost of Funds Index couldn’t go any lower, a new record was established. A more widely used index for adjustable-rate mortgages, however, was higher.
At 1.038 percent in September, COFIÂ came in at the lowest level ever recorded.
The index retreated from August, when it stood at 1.069 percent. An even bigger decline occurred from September 2011, when COFIÂ was 1.276 percent.
The 11th District COFIÂ is calculated by determining the aggregate interest expense for banks that are members of the Federal Home Loan Bank of San Francisco with headquarters in Arizona, California and Nevada.
Average total funds used in September’s calculation were $33.9 billion.
COFIÂ is the index used to determine rate and payment adjustments on some ARMs — many of which are hybrid ARMs with negative amortization.
A competing index, the yield on the one-year Treasury note, inched up to 0.17 percent at the end of September from 0.16 percent as of Aug. 31, according to data from the Department of the Treasury. The one-year yield closed Wednesday at 0.18 percent.
ARMs accounted for just 2.5 percent of all loan pricing inquiries in the U.S. Mortgage Market Index from Mortech Inc. and Mortgage Daily for the week ended Oct. 26 .
