NEW YORK (MainStreet) – The good news is that falling interest rates on savings at your local bank seem to have hit bottom. The bad news is that they might stay there for a long time yet.

National bank rate averages provided by RateWatch for November show that once again deposit rates have fallen across the board, with interest rates on certificates of deposit for 12, 36, 48 and 60 months all down by the end of the month. 

Compared to prior months, the rate of decline has slowed, which is good news for anyone looking for a safe place to put their savings. Twelve-month CDs fell a single basis point in the month of November, 36- and 48-month CDs fell by only two basis points, and 60-month CDs fell by just three basis points. By comparison, the average 36-month CD fell by 21 basis points from the end of July to the end of October, an average decline of seven points per month.

Things also seem to be stabilizing on the loan side. While interest rates on personal unsecured loans and five-year adjustable rate mortgages fell five and six basis points, respectively, home equity and new auto loans saw zero change from the previous month. 

“Rates have definitely stabilized,” confirms Mike Moebs, CEO of Moebs Financial Services.

Taken together, that means the interest rate climate got only very slightly better for consumers in November, but reduced volatility is a step in the right direction.

A bit of bottoming out was expected after deposit rates began to fall precipitously in August, a decline sparked by the Federal Reserve Bank’s announcement that it planned to keep interest rates low through at least mid-2013. So can we now expect rates to start climbing back up, or will Fed policy continue to depress bank rates throughout 2012?

“They’re going to stay that way for at least a year,” predicts economist Lance Roberts, CEO of Houston-based investment management firm Streettalk Advisors. “What you’d need to see [for rates to rise] is a very strong rebound in the real underlying economics.” He adds that the recent decrease in the unemployment rate doesn’t constitute any significant turnaround, as it largely shows that more people are dropping out of the job market rather than getting jobs.

Moebs agrees with that 2012 outlook, noting that the recent announcement by the Fed’s Open Market Committee that pledged to keep rates low through 2013 means that consumers shouldn’t expect any kind of turnaround on deposits or loans. But that doesn’t mean things can’t get worse for consumers.

“We’re not going to see an increase in rates, but we’ll see an increase in fees on loans,” says Moebs. “On rates I don’t see any movement, possibly into 2014. But the consumer has to watch those yields.”

He does add that the bulk of those fee increases will come on commercial loans, where the Truth in Lending Act does not require lenders to disclose the true cost of a loan. But he says consumers should still be on the lookout for higher fees when they go to get a loan on a home or car.

The net result is that the outlook for consumer banking power doesn’t look all that rosy as we head into 2012. As it stands now, the Credit Power Index – which gauges the consumer interest rate climate by accounting for both loan and deposit rates – stands at 22.55, a slight improvement from last month’s figure. But that’s still well above pre-recession levels, when the index hovered around 19, indicating a much more favorable banking environment for consumers. (A lower index figure indicates a more favorable interest rate climate; for a full explanation of how the index is calculated, see our explanatory graphic.)

12-Month CDs: 0.37%
36-Month CDs: 0.80%
48-Month CDs: 1.00%
60-Month CDs: 1.29%

Personal Unsecured Loans: 12.12%
36-Month Home Equity Loans: 6.39%
48-Month New Auto Loan: 4.38%
60-Month Adjustable Rate Mortgage: 3.12%

So will these continuing low rates prompt any sort of shift in consumer behavior? Don’t count on it. As MainStreet has previously reported, banks continue to have trouble finding people they actually want to lend money to, so many Americans can’t take advantage of those low rates even if they want to. And on the deposit side, many customers are still sufficiently skittish about market uncertainty that they’d rather endure another year of getting virtually zero return on their savings accounts and CDs.

“Consumers’ retirement plans have been destroyed, they are barely struggling to make ends meet and they’ve lost confidence in the financial system,” says Roberts. “They don’t care if they’re getting zero [return], they just care that it’s in the bank and they’re not losing money.”

Matt Brownell is a staff reporter for MainStreet. You can reach him by email at, or follow him on Twitter @Brownellorama.