NEW YORK (MainStreet) -- These are perilous times for investors in general, but what about bank deposit investors?
You can’t blame bank deposit consumers for lacking confidence. First Standard & Poor’s downgrades the U.S. debt for the first time in history, then credit agencies take their chainsaws to Fannie Mae (Stock Quote: FNM) and Freddie Mac (Stock Quote: FRE), downgrading their ratings early Monday.
What’s a bank deposit investor to make of it all? Bank lending rates are still declining. Nobody seems to know why, but mortgage rates are in decline, and not in growth momentum, following Friday’s debt downgrade. The BankingMyWay Weekly Mortgage Rate tracker looks like his today:
- Description This Week Last Week
- One-Year ARM 3.699% 2.836%
- Three-Year ARM 3.177% 3.291%
- Five-Year ARM 3.246% 3.402%
- 15-Year Mortgage 3.729% 3.942%
- 30-Year Mortgage 4.579% 4.747%
In a nutshell, mortgage rates aren’t rising (with the exception of the one-year ARM), as the conventional wisdom stated in the immediate aftermath of the debt downgrade. That should reassure homebuyers and sellers who need low rates to get a home sale done in an otherwise tough market.
Investors aren’t unloading Treasuries. Here’s another gem from the conventional wisdom front: The smart money said that once bond traders got their meat hooks into Treasuries today, bond prices would fall, thanks to the debt downgrade. But investors are still buying into the 10-year Treasury, which clung to a rate of 2.46% in mid-morning Monday trading. With bond prices high and yields low, that spells trouble for bank rate investors, as bank rates are normally tied to the direction of Treasury rates. Keep an eye on that 10-year Treasury rate – if the rate goes down (and it’s at its lowest levels since October 2010 already), expect bank rates on things like certificates of deposit to go down, too,