Key Mortgage-Linked Rate Drops Again

The 11th District cost of funds--the rate to which many adjustable-rate home mortgage loans are tied--dipped to 4.881% in May from 4.903% in April, the Federal Home Loan Bank of San Francisco reported. It was the fourth consecutive monthly decline in the rate, which now stands at its lowest level since June 1997, when it was 4.853%. The rate, which tends to lag changes in market interest rates by several months, measures the average cost of funds for the thrifts and other financial institutions in the bank’s 11th District, which covers California, Arizona and Nevada.