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

Popular posts from this blog

Update: First Responder Credit Unions Academy (FRCUA) Udates

In an ongoing effort to keep your FRCUA education current, modules are continually updated to reflect current NCUA and other regulatory agency requirements. As an example, BSA 26 now includes  Artificial Intelligence and BSA,  Elder Financial Exploitation,  Pig Butchering & BSA, and Executive Order –  Free and Fair Banking.

Mortgage Rates Tick Down

MCLEAN, Va.--Mortgage rates moved slightly lower this week, with the 30-year fixed-rate mortgage averaging 6.56%, Freddie Mac reported. “Mortgage rates are at a 10-month low,” said Sam Khater, Freddie Mac’s chief economist. “Purchase demand continues to rise on the back of lower rates and solid economic growth. Though many potential homebuyers still face affordability challenges, consistently lower rates may provide them with the impetus to enter the market.” The 30-year FRM averaged 6.56% as of Aug. 28, down from last week when it averaged 6.58%. A year ago at this time, the 30-year FRM averaged 6.35%. The 15-year FRM averaged 5.69%, unchanged from last week. A year ago at this time, the 15-year FRM averaged 5.51%, Freddie Mac said. ____________________________________________ Check out NCOFCU's additional features: First Responder Credit Union Academy Podcasts YouTube Mini's Blog Job Board

SIGN UP FOR YOUR CUSTOM HEALTH INSURANCE SOLUTION TODAY

 https://bizu65.allstatehealth.com/?password=demo ____________________________________________ Check out NCOFCU's additional features: First Responder Credit Union Academy Podcasts YouTube Mini's Blog Job Board

Wendelville Fire Chief Andrew Pilecki re-elected to FASNY board

Andrew Pilecki, the current fire chief of Wendelville Volunteer Fire Company, has been re-elected to the board of directors of the Firefighters Association of the State of New York. Pilecki has been a member of the fire service for more than four decades, including the past 22 years as a responder with the Wendelville company. Previously he was an active member of Columbia Hook and Ladder Co. He’s also a former assistant director of emergency management for the City of North Tonawanda. FASNY directors serve five-year terms of office. During his first term, Pilecki was instrumental in supporting the association’s pandemic response, championed fire company recruitment and retention efforts, and worked to amplify the needs of Western New York’s volunteer fire service at the state level, according to FASNY. “I’m honored to be re-elected and to continue advocating for the men and women who volunteer their time, risk their safety and serve their communities across the state,” Pilecki said. “...

Many CUs Likely to Face New Operating Challenges "Michael Moebs"

04/08/2024 09:04 pm By Ray Birch LAKE FOREST, Ill.—The trend lines don’t lie: Financial institutions charging high overdraft fees will likely face operating challenges in the near future and may even be forced to merge if they don’t follow the market trend of lowering their OD charge. Michael Moebs, economist and chairman of Moebs $ervices, is offering that forecast following his company’s new overdraft study, which has found overall net OD revenue for 2023 was down 5.7%, with banks dipping by 8.1% to $31.4 billion, thrifts falling by 28.6%. and credit unions actually increasing net revenue 2.2%. The study further reveals the m...