FHLB Cost of Funds Index Rose in April

The Cost of Funds Index for savings institutions in the 11th Federal Home Loan Bank District rose to 4.822% in April from 4.780% in March, the FHLB said. The index measures the interest paid by thrifts in the district on deposits, advances from the FHLB and more costly purchases of short-term funds. It is also used as a base rate for West Coast mortgages and, therefore, for bonds backed by those loans. A rise in the index, called COFI, reduces the disposable income of homeowners who have adjustable-rate mortgages by increasing their monthly mortgage payments. For bondholders, a rise in the index increases the interest they receive on their adjustable-rate mortgage securities. The April index announced by the San Francisco-based FHLB will be in effect through June. The 11th district consists of California, Arizona and Nevada.