Concerns over emerging markets and a selloff in stocks has pushed mortgage rates lower once again in 2014.  The rate drop on mortgages makes it four weeks in a row where the average cost has ticked lower.  While mortgage rates and Treasury rates showed some fairly aggressive downside action as consequence of the uncertainty over emerging markets, CD rates, savings  rates and credit card rates were muted with little rate changes seen among these bank products.

The dip in mortgage rates and Treasury rates took place even while the Fed announced they will continue to cut back on its asset purchases through 2014.  After the December taper announcement in which Fed made the decision to cut back on their bond buying, monetary easing program by $10 billion, the Fed announced on Wednesday of last week that the reduction will be increased by another $10 billion.  The first announcement caused a jump in interest rates but this week’s announcement had little impact and as the week came to a close, long term interest rates continued to move lower.

The key to the inactivity in CD rates, savings rates and credit cards was the changes in the yield curve and specifically, the more substantial differences seen in longer term interest rates over that of short and midterm rates.  From January 1 to January 31 of this year, the five year Treasury note gave up a hefty 23 basis points.  At the onset of the month, the five year had a yield of 1.72%, by the end of the month the rate of return on the five year had dipped to 1.49%.  The ten year Treasury bond showed a similar downward move, dropping 33 basis points from 3.00% to 2.67%. 

When interest rates shift, short term rates are generally not expected to move as much on an absolute basis as the longer term maturities, however this time around the action on the short end of the curve was far less substantial than the rate changes found on longer end of the yield curve.  Over the course of January, as the long rates were hit hard, the shorter term maturities did a better job of holding their ground.  The three year Treasury note shed just seven basis points in the month of January to close the month at 0.69% after starting out the year at 0.76%.  A two year Treasury rate moved downs by only five basis points with the two year yield sliding to 0.34% from 0.39% at the start of the month. 

The difference in interest rate movements between the long end and the shorter term rates has flattened the yield curve with the bulk of the rate action taking place on longer term securities.  The spread between the one year Treasury and ten year has been cut to 2.57% from 2.87%.  The flatter curve impacts consumers with savings rates that barely budge and long term borrowing rates that move measurably lower.  Hence, CD rates and savings account rates showed little change this week while 30 year fixed rate mortgages made a noticeable drop.

The weekly bank rate survey provides a detailed report on bank savings rates and lending rates by different consumer rate categories.  The most current survey is for the week ending January 31, 2014.  The weekly rate survey presented the following interest rates and their changes for mortgage rates, CD interest rates, credit card rates, money market rates, savings account rates and Treasury rates.

Bank Rates Market Recap for January 31, 2014

CD interest rates:
Composite CD interest rate index 1.084 percent (up .002 percent)
3 month CD rates 0.403 percent (unchanged)
6 month CD rates 0.767 percent (unchanged) 
1 year CD rates 1.033 percent (unchanged) 
2 year CD rates 1.163 percent (unchanged) 
5 year CD rates 2.043 percent (up .011 percent) 

Money market and savings account rates:
Bank money market rates and savings account rates 0.875 percent (unchanged) 

Mortgage rates: 
30 year mortgage rates 4.396 percent (down .08 percent) 
15 year mortgage rates 3.509 percent (down .08 percent) 
20 year mortgage rates 4.161 percent (down .041 percent) 
30 year jumbo mortgage rates 4.237 percent (down .086 percent) 
30 year FHA mortgage rates 3.978 percent (down .11 percent) 

Credit card rates:
Credit card rates for new credit card offers 13.85 percent (unchanged)

US Treasury rates:
Six month Treasury rate 0.06 percent (unchanged)
One year Treasury rate 0.10 percent (down .01 percent)
Two year Treasury rate 0.34 percent (down .03 percent) 
Five year Treasury rate 1.49 percent (down .09 percent) 
Ten year Treasury rate 2.67 percent (down .08 percent) 

All bank savings rates and lending rates are based on surveys conducted by at the close of January 31, 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.  

For more detailed interest rate data on mortgage rates, CD rates, credit card rates and savings account rates for the week ending January 31, 2014 please see: 3 month CD rates, 6 month CD rates, 9 month CD rates, 1 year CD rates, 2 year CD rates, 4 year CD rates, 5 year CD rates, 30 year mortgage rates, 15 year mortgage rates, FHA mortgage rates, 20 year mortgage rates, 10 year mortgage rates, jumbo mortgage rates, VA mortgage rates, best interest checking accounts and best credit card rates.

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