The cost of funds index (COFI) fell for the third consecutive month, nearing its lowest point in decades.
COFI represents the actual interest expenses recognized during a given month by all savings institution members headquartered in Arizona, California, and Nevada. The Federal Home Loan Bank of San Francisco reported that the Monthly Weighted Average COFI for September was 2.759%, about one basis point -- or 0.01% -- better than the prior month.
The COFI average is announced about 30 days following the end of each month.
The index, which is one of many indices used by lenders to determine the interest rate on adjustable rate mortgages, reached its lowest point in decades last March, falling to 2.653%.
Freddie Mac announced Thursday that the average one-year adjustable rate mortgage (ARM) was 4.25%, down from 4.30% the prior week. In September, the ARM fell to 4.22% -- its lowest point in nearly a decade.
The Mortgage Bankers Association of America reported Wednesday that ARM applications made up 15.2% of total applications, up from 13.9% the prior week.
Sam Garcia has been in mortgage lending since 1980, and is publisher of MortgageDaily.com. He also owns and operates CloseNow.com, a real estate portal site.