TheStreet (Nasdaq: TST ( TheStreet)), a leading digital financial media company, announced today that the Credit Power Index ™ produced by its RateWatch division, revealed a significant improvement in March in the interest rate climate for consumers of bank lending and saving products. The 24 basis point decline in March is the largest one-month improvement in the index since June 2010 and the fourth straight month that the index has dropped, offering clear evidence of a recovery in consumer interest rates after a late-2010 spike threatened to reverse the trend of the past two years. As of the end of March, the index stands at 23.3; while that’s still up considerably over pre-recession levels (four years ago the index was at 19.2), it still marks an improvement over the peak of 25.5 reached at the height of the recession in May 2009.

The Credit Power Index, which launched in January, gauges the relative squeeze that banks put on American consumers by comparing the difference in the rates banks charge for loans against the interest they offer for deposits.

The Credit Power Index is calculated by comparing the gap between certificate of deposit rates at four terms – 12, 36, 48 and 60 months – with the rates on selected loan products at the same terms (personal unsecured loans, home equity loans, new auto loans and adjustable-rate mortgages). The larger the disparity between loan and deposit rates, the higher the index will be, indicating how much consumers are getting squeezed by their banks. (See our graphic for a full explanation of the methodology http://www.mainstreet.com/article/moneyinvesting/credit/debt/how-credit-power-index-works.)

In March all of the good news came on the loan side of the equation, with loan rates dropping 29 basis points in the aggregate.

“The loan component on the national level is the lowest it has been since we started tracking this indicator in January of 2007,” notes RateWatch Chief Operating Officer Bob Quinn. “In fact, the loan component back in January of 2007 was 25% higher than the current value.”

Home equity loans stayed relatively stable and auto and personal unsecured loans saw modest drops, but the big story here is five-year adjustable-rate mortgages, which fell 15 basis points between February and March to 3.73%. Average rates for the product had been on the rise since bottoming out at an astonishing 3.42% in October 2010, but this latest dip suggests that ARM rates will stay below 4% for the foreseeable future. In this respect rates reflect the home mortgage market as a whole, where 30-year fixed mortgages have held steady around 5% for months.

Unfortunately, deposit rates also continue to hold steady after showing some encouraging signs in February. CD rates fell 5 basis points in the aggregate last month, with 60-month CDs losing a point after spiking the preceding month. As of the end of March, the average 12-month CD now pays out just 0.52% – a new low – and there are few signs that rates are going to turn around anytime soon.

On a regional level, says Quinn, the South boasted the most consumer-friendly rates in the country for the second straight month, while the West once again had the worst rates in the US, a dubious distinction it has held for more than two years.

“This is primarily due to the Southern region paying substantially higher returns for deposit products,” Quinn says.

March also brought the usual month-to-month variance on the regional level. The central region, for instance, dropped 21 basis points after spiking 31 basis points the preceding months. In general such month-to-month regional swings can be disregarded as statistical noise, though it’s worth noting that the East has fallen consistently for the past three months and the West fell 84 basis points during the same period. While it’s not clear whether these regional trends will continue, for now we can at least say that the country as a whole continues to move in a direction that’s benefiting consumers.

NOTE TO EDITORS: The full Credit Power Index database is available at http://www.mainstreet.com/credit-power .

About RateWatch

One of the nation's largest providers of accurate, up-to-date rate information, this web site, www.rate-watch.com, is relied upon by countless banks and credit unions, providing key data so they can set competitive rates.

About MainStreet

MainStreet provides personal finance tips and advice to help consumers grow their wealth and enhance their lives. By combining lifestyle news, commentary and financial resources, MainStreet is an engaging and fun site "where life and money intersect."

About TheStreet

TheStreet.com, Inc. is a leading digital financial media company that distributes its content through online, social media, tablet and mobile channels. The Company's network of brands include: TheStreet, RealMoney Silver, Stockpickr, Action Alerts PLUS, Options Profits, ETF Profits, MainStreet and Rate-Watch. For more information on TheStreet’s business, visit www.t.st. For financial and business news, actionable trading ideas, stock quotes and more, visit TheStreet.com via your web browser, follow TheStreet on Facebook and Twitter, visit TheStreet.mobi from your mobile device and access TheStreet through all major tablet platforms.

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