When will CD interest rates rise?
UNDATED — If you have opened a Certificate of Deposit at the bank recently you know the interest rates have been little changed. When will banks be operating more than 1% interest? Don Steele, President and CEO of Northumberland National Bank says unfortunately, banks need to make money too.
“The rates we obtain from loans and investments have been going down and the rates, more or less, are established through the Federal Reserve open market committee,” says Steele, “the target 0-25 basis points has really set a floor and their other operations have brought down the whole treasury curve going out to 30 years, but primarily in the 2-10 year range where you are looking at an interest rate of .35% to maybe a little over 1.5%.”
Steele says loans have also dropped which is a factor as well. “Mortgages may be in the 3%, prime rate is 3.25%, so all those rates and the difference between what we can get on our income and what we can pay limits what we can pay out.”
Steele was on our On The Mark program Wednesday morning, which you can download online at www.wkok.com. (Sara Bartlett)
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