Mortgage rates were driven lower once again with the average 30 year mortgage rate shedding just over two basis points to 4.164%.  One basis point is the equivalent of 1/100th of a percent.  Not much of change but mortgage rates continue to cling to the lowest levels seen so far this year.  While borrowing costs for new home buyers and those wanting to refinance dipped, savings rates moved higher.  This past week, both bank savings accounts rates and bank certificate of deposit rates crawled higher.

The average rate earned on the best CD rates available nationwide edged up to 1.124% from 1.120% in the previous week.  Midterm CD rates led the way with both, one year CD rates and two year CD rates, advancing higher. 

The average rate on the highest yielding CDs available is based on the CD rate index which measures the best CD rates on three month CDs, six month CDs, one year CDs, two year CDs and five year CDs that are available nationally. 

Bank savings rates and money market account rates also marched higher on the week.  The average interest rate on these bank savings products ended the week at 0.956% after starting out the week at 0.947%.

Ignoring the divergence between bank savings rates and lending rates, it has been difficult to find the cause for the sharp drop in bond rates this summer.  Not because rates should be moving higher but, the precise cause is mystifying.  The U.S. economy is still showing signs of moderate growth, which may very well explain rising savings rates and CD rates, only to be countered by slow economic growth overseas and substantial global destabilization. 

Interest rates could easily move lower as funds flow into the US bond market since Putin is not backing off advances into the Ukraine and more than one Middle East nation is being torn apart.  Add to this, lower growth in Europe and concerns over the outlook for the economies in Asia and a low interest rate future looks certain.  But, you cannot ignore the strength in the U.S. economy.  Loan demand is higher, bank profits are through the roof, jobs are…getting better, and production is doing well.  All factors that move interest rates and inflation north bound.

We’ll leave this subject for brighter minds to debate.

Bank Rates Market Recap with the Weekly Change in Interest Rates Offered for September 1, 2014.

CD interest rates:
Composite CD interest rate index 1.124 percent (up .004 percent) 
3 month CD rates 0.396 percent (unchanged)
6 month CD rates 0.737 percent (unchanged)
1 year CD rates 1.070 percent (up .013 percent) 
2 year CD rates 1.239 percent (up .005 percent) 
5 year CD rates 2.176 percent (unchanged)

Money market and savings account rates:
Bank money market rates and savings account rates 0.956 percent (up .009 percent)

Mortgage rates:  
30 year mortgage rates 4.164 percent (down .024 percent) 
15 year mortgage rates 3.378 percent (down .008 percent) 
20 year mortgage rates 3.866 percent (down .065 percent)
30 year jumbo mortgage rates 4.078 percent (unchanged)
30 year FHA mortgage rates 3.933 percent (down .037 percent)

Credit card rates:
Credit card rates for new credit card offers 13.88 percent (unchanged)

US Treasury rates:
Six month Treasury rate 0.05 percent (down .01 percent)
One year Treasury rate 0.09 percent (down .01 percent)
Two year Treasury rate 0.48 percent (down .05 percent)
Five year Treasury rate 1.63 percent (down .05 percent)
Ten year Treasury rate 2.35 percent (down .05 percent)

All bank savings rates and lending rates are based on surveys conducted by at the close of September 1, 2014 with all of the interest rates obtained directly from the banks within the survey.  Treasury rates are obtained directly from the Department of the Treasury.  

Additional bank rate data is available to help consumer shop and compare mortgage rates, CD rates and checking accounts for the week ending September 1, 2014 at the following rate tables: 9 month CD rates, 3 year CD rates, 4 year CD rates, 20 year mortgage rates, VA mortgage rates, and the best interest checking accounts.

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