Late yesterday (Tuesday) afternoon, the Federal Reserve slashed its target for the overnight federal funds rate to a range of 0 to 0.25 percent. That may sound like meaningless gobbledygook, but it’s not. It’s an all-time record low. Read the rest of this entry »

Today the Federal Home Loan Bank released the 11th District Cost of Funds Index for 2008. At 2.693% it is lower than July’s index, which was 2.698%.

The COFI is computed from the actual interest expense by the Arizona, California, and Nevada members of the Federal Home Loan Bank of San Francisco that meet the Bank’s criteria for inclusion in the COFI (”COFI Reporting Members”). Interest rates on many adjustable rate mortgage loans are determined by this index.

This should be a source of relief to those with monthly ARMs (like many payment option ARMs) who can’t refinance due to a lack of equity in their homes. At least their rates are not increasing and have in fact dropped slightly. Homeowners who avoid the temptation of the minimum payment on these loans and make the fully-amortized payment most of the time don’t face the same well-publicized payment jump that others have.