Skip to main content

CD rates have reversed course!

SAN FRANCISCO—For the first time in five years, rates of certificates of deposits have reversed course and are declining, a new report reveals. Separately, mortgage rates have also declined to a two-year low.

The report from Analyticom signals a reversal of a rising-rate trend that started in June of 2014 and lasted until now. The last time deposit rates started declining, as they are now, was 12 years ago on the eve of the Great Recession in July of 2007.

“The main driver behind the decline in CD rates is the growing probability of a Fed rate cut in the second half of this year,” stated Analyticom’s Dan Geller. “Banks and credit unions are lowering interest rates on CDs in order to reduce their risk and exposure to shrinking net interest margins once the Fed cuts the Funds rate and loan rates start to decline.

“The decrease in interest rates on CDs is going to impact fixed-income savers, such as retirees, who like the safety and predictability of certificate of deposits despite their relative low interest rates, compare to investments that carry some risk,” continued Geller. “Risk-averse people, such as retirees, prefer the five-year CD, which offers the highest interest rate of all deposit types.”

In June of 2014, the national average of the five-year CD was only 0.75% and it increased to 1.28% after five years. However, in some markets the rate of the five-year CD is twice as high as the national average. As of June of this year, the national average rate for the five-year CD has declined to 1.21% according to data from the FDIC, Geller said.

Mortgage Rates Decline

Separately, mortgage rates hit their lowest levels since November 2016. Freddie Mac reported the 30-year fixed-rate average fell to 3.73% with an average 0.5 point. The rate is down from 4.55% one year ago. The 30-year fixed rate has fallen in seven of the last nine weeks.

The 15-year fixed-rate average dropped to 3.16%, down from 4.04% a year ago, while the five-year adjustable rate average fell to 3.39%, down from 3.87% a year ago.



Comments

Post a Comment

Please no profanity or political comments.

Popular posts from this blog

Let the Truth be Told - Why a New NCUA Rule Could Jolt Credit Union Innovation

The National Credit Union Administration has finalized a rule to improve board and executive succession planning within the credit union industry. This strategic move aims to curb the trend of mergers driven by technological stagnation and poor succession strategies, ensuring more credit unions maintain their independence and enhance their technological capabilities. By Ken McCarthy, Manager of marketing communications at Tyfone Credit unions are merging out of existence because of an inability to invest in technology, the National Credit Union Administration Board wrote when introducing its now finalized rule on board succession planning. The regulator now requires credit unions to establish succession planning for critical positions in their organizations. But it’s likely to have even wider effects, such as preserving more independent charters and shaking up the perspectives of those on credit union boards. “Voluntary mergers can be used to create economies of scale to offer more or ...
Post a Comment
Read Complete Article HERE>»

Armand Parvazi MBA CUDE - Last Friday marked his last day with New Orleans Firemen’s Federal Credit Union.

It’s been an incredible journey, but it’s bittersweet to announce that Friday marked my last day with New Orleans Firemen’s Federal Credit Union. We've accomplished so much together in my six years as Chief Administrative and Development Officer. Some of the highlights: Implemented a data-driven marketing strategy that delivers over 1,800% annual ROI. Developed automated triggers to ensure members receive the right offers at the right time. Grew assets by 61% and increased products per new member from 1.88 to 2.62. Converted online banking to enhance the member experience. Introduced a loan origination system for faster and more efficient loan processing. Transitioned to a mobile-first financial institution to meet members where they are. Pioneered the first Cancer Care loan pause program in the nation (in collaboration with Andy Janning ) Secured nearly $17 million in grants for our impactful work. Expanded our field of membership to 35 parishes and counties and added numerous fi...
Post a Comment
Read Complete Article HERE>»

Biggest Social Security Changes for 2025

  Chris Gash Facebook Twitter LinkedIn Monthly payments are going up, and drop-in service at SSA offices is largely going away The  cost-of-living adjustment  (COLA) may be the most widely anticipated way Social Security changes from year to year, but it’s far from the only one. Inflation, wage trends and new policies directly affect not just the more than 68 million people receiving Social Security benefits but also the estimated 184 million workers (and future beneficiaries) paying into the system.  Here are seven important ways Social Security will be different in 2025. 1. Cost-of-living adjustment Inflation continued to cool this year , resulting in a  2.5 percent COLA  for 2025 for people receiving Social Security payments, down from  3.2 percent in 2024 . The estimated average retirement benefit will increase by $49 a month, from $1,927 to $1,976, starting in January, according to the Social Security Administration (SSA). It’s the lowest COLA i...
Post a Comment
Read Complete Article HERE>»