The spread between the one-month certificate of deposit interest rate and the 30-year fixed-rate mortgage is around 4.4% right now, about 55% higher than the 40-year historical average of 2.83%, according to MoneyRates.com’s new Consumers Lost Interest Percentage index. And the company believes it will get wider still.
Most importantly, this gap has not been below 2.83% in nearly five years (October 2008). This shows that consumers have been getting what the company terms “a below-average deal” from banks for the time period.
“The notion that low mortgage rates have favored consumers has been a bit of an illusion,” says Richard Barrington, senior financial analyst for MoneyRates.com. “It has favored borrowers but not savers, and when you take the two on balance, the consistently high level of the CLIP Index indicates that
So far, 2013 has brought sharp increases to the gap between one-month CD rates and mortgage rates, suggesting that even less-attractive banking conditions for consumers could still be ahead. The gap at the end of 2012 was 3.28%, 112 basis points lower than it is now.
“This is a bad situation getting worse,” says Barrington. “The CLIP Index has risen by more than a full percentage point so far this year—and it was already above average when the year began.”
