BANKING

Cost of Funds Keeps Dropping: The 11th District cost of funds index, a measure frequently used by lenders to set adjustable-rate mortgage rates, continued to tumble in September to 6.714%, down from 6.845% in August. Lenders typically adjust payments to reflect an interest rate 2% to 2.5% above the index, which is compiled by the Federal Home Loan Bank of San Francisco. The index, which reflects interest rates paid to savers by thrifts in Arizona, California and Nevada, has fallen in the wake of the sharp drop in overall interest rates. Since June, the 10-year-old index has been setting record lows.