The long awaited Fed move has now come and gone.  The Federal Reserve raised interest rates for the first time in almost a decade on December 16.  The Federal Reserve’s Open Market Committee (FOMC) finally pulled the trigger and raised the range for the fed funds rate by a quarter of a percentage point to between 0.25 percent and 0.50 percent.  The fed funds rate is the interest rate that banks charge other banks on overnight loans and is greatly influenced by actions taken by the FOMC.

Fed fund rate changes generally influence other short term interest rates on loans and savings products.  A rate hike by the Fed leads to rate hikes on mortgages, credit cards, business loans, savings accounts, bank CDs,  and a whole host of other interest bearing financial products.  Often though, the time period between a rate hike by the Fed and rate changes in the market place can be drawn out.  And, this is looking like one of these times.

After the announcement, midterm Treasury rates did advance with yields climbing by a few basis points on the two through five year term Treasury notes.  However, the week over week changes on Treasuries were notable due to their inaction.  One basis point is 0.01% or 1/100th of a percent.

Three month, six month and one Treasury rates declined slightly on the week.  The two year and five year notes made modest climbs, up by nine basis points on the two’s and 11 basis points on the five’s.  The ten year gained just six basis points during the week.

Interest rate inertia was even more noteworthy on bank savings products and loan products. The average rate on the best CD rates available nationally, measured by the CD rate index, was unchanged on the week. Of the five maturities measured in the weekly index, only the six month rates displayed a rate change and climbed five basis points to end the week at 0.870%. The other four maturities saw no weekly change on the top performing accounts.

Bank money market rates and savings accounts rates lost ground this week.  Rates dipped modestly for new savers on these variable rate instruments.  The average rate on the top ten highest money market and savings rates fell to 1.055% from 1.060% at the start of the week.

Mortgage rates are now a little more costly for borrowers but the increase in costs, rates and points, was quite mild in light of the week’s events.  The average 30 year fixed rate mortgage coming from the nation’s leading bank mortgage lenders was up just over two basis points, moving up to 4.066% from 4.047% in the previous week.  Mortgage rate changes after the Fed decision will be almost undetectable for most borrowers.

FHA mortgage rates and jumbo mortgage rates climbed by amounts that were mostly in line with conforming rate changes.  The average jumbo mortgage rate moved up to 3.824% from 3.778%.  FHA rates barely budged with an increase to 3.820% from 3.813% the week earlier.

Bank rates market recap for December 21, 2015:

CD interest rates:
Composite CD interest rate index 1.243 percent (unchanged
3 month CD rates 0.436 percent (unchanged)
6 month CD rates 0.870 percent (up 0.05%)
1 year CD rates 1.250 percent (unchanged)
2 year CD rates 1.427 percent (unchanged)
5 year CD rates 2.234 percent (unchanged)

Money market and savings account rates:
Bank money market rates and savings account rates 1.055 percent (down 0.005%)

Mortgage rates:
30 year mortgage rates 4.066 percent (up 0.019%)
15 year mortgage rates 3.402 percent (up 0.039%)
20 year mortgage rates 3.813 percent (unchanged)
30 year jumbo mortgage rates 3.824 percent (down 0.046%)
30 year FHA mortgage rates 3.820 percent (down 0.007%)

Credit card rates:
Credit card rates for new credit card offers 13.89 percent (unchanged)

US Treasury rates:
Six month Treasury rate 0.47 percent (down 0.05%)
One year Treasury rate 0.67 percent (down 0.01%)
Two year Treasury rate 0.97 percent (up 0.09%)
Five year Treasury rate 1.67 percent (up 0.11%)
Ten year Treasury rate 2.19 percent (up 0.06%)

All bank savings rates and lending rates are based on surveys conducted by at the close of December 18, 2015 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.

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