Interest expenses for Western financial institutions shot up — yanking the Cost of Funds Index well off of its record low.
The index was 1.832% in May, the Federal Home Loan Bank of San Francisco reported today. Last month, COFI had fallen to its lowest level on record: 1.380%.
Still, the index remains below May 2008, when it stood at 2.918%.
The FHBL determines COFI based on interest expenses for 11th District members headquartered in Arizona, California and Nevada. Last month’s index was computed based on average total funds of $96.1 billion.
Another adjustable-rate mortgage index, the yield on the one-year Treasury bill, finished May at 0.47%, lower than 0.49% at the end of April. Today, the 1-year yield closed at 0.56%.
The six-month London Interbank Offered Rate was 1.22% at May’s end compared to 1.58% in April. As of last Wednesday, LIBOR — which is a popular index for subprime ARMs — was 1.15%.
The Mortgage Bankers Association reported that ARMs accounted for 4.1% of applications in its Weekly Mortgage Applications Survey for the week ended June 19.
