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The 11th District Cost of Funds Index (COFI) continued its downward path as the adjustable-rate mortgage (ARM) share of applications climbed to its highest point in years.
The Federal Home Loan Bank of San Francisco reported the weighted average COFI fell from the prior month about two basis points (BPS) in September to 1.923%. The index, which is reported about 30 days following the end of the month, kept falling to historic lows -- as it has declined 16 months in row. A year ago, the COFI stood at 2.759%.
The index represents actual interest expenses recognized during a given month by all savings institution members headquartered in Arizona, California, and Nevada. The average total funds used to calculate the COFI in September was $389.5 billion, compared to $381.1 billion the prior month.
The Mortgage Bankers Association of America reported last week that the share of ARM applications was at its highest point in over two and a half years at 26.5%. COFI and the one-year Treasuy-index compete for ARM applications. Freddie Mac reported last week that the average for one-year Treasury-indexed ARMs also fell two BPS to 3.74%.
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