KeyBank Long Term CD Rates

KeyBank has some very competitive long-term CD rates. The best rates are for the Key Tiered CD with Relationship Reward. The two best rates are a 5.25% APY 48-month CD and a 4.55% APY 23-month CD. The minimum deposit is $25,000. Without the relationship reward, the rates are 25 basis points lower.

The Relation Reward requires you to have either the Key Advantage, Key Privilege or Key Privilege Select checking accounts. The one with the smallest balance requirement is the Key Advantage which requires a combined balance of $10,000 to avoid a $15/month fee.

You can apply at a KeyBank branch or online. However, based on the online application, it appears you have to live in a state where they have branches. This includes the following states: AK, CO, ID, IN, KY, ME, MI, NY, OH, OR, UT, VT, or WA.

Fed Keeps Rates Unchanged

As expected, the Fed decided to keep rates unchanged. The target for the federal funds rate remains at 2%. Based on the Fed’s statement, my guess is that the Fed will remain on hold for a while. It did say that “uncertainty about the inflation outlook remains high”, but it also said it “expects inflation to moderate later this year and next year.” Another sign that the Fed will hold steady is the following phrase that was also mentioned in April: “the substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time.”

So it looks like it’s going to take continued high inflation without any major economic downturn before the Fed starts hiking rates. I have a feeling this will reduce some expectations for big future rate hikes. So we may see a slowdown in the recent long-term CD rate increases. We now have several banks offering long-term CD rates of 5%+ and 12-month rates of 4%+. These rates may not go up much from here at least in the short term.

For savings account rates, there are many paying over 3% now. But with the fed funds rate at 2% and potentially holding for several months, banks may want to bring down their savings account rates. Competition should at least slow this drop. As we saw after HSBC Direct started its 3.50% savings account promo, several banks followed with their own rate hikes. The HSBC promo is scheduled to last through August, 15th. The next Fed meeting is scheduled for August 5th. If the Fed continues to hold steady with no significant signs of future rate hikes, I wouldn’t be surprised to see HSBC drop their rate back down to 3.05% or even lower.

The Fed, Interest Rates, & Economic Calendar

Last friday’s release of a large increase in the unemployment rate and a surge in oil prices spooked financial markets with a carry-over effect to Asian and European markets. With the Federal Reserve expected to keep interest rates steady through the June meeting, this week will see a sharp focus on economic releases to clarify the future of the US economy. The economic calendar will provide plenty to analyze:

Economic Calendar this Week

Monday – Federal Reserve Chairman Ben Bernnake gives a speech at an inflation conference. Bernanke, who just last week gave his public support for the importance of maintaining a strong US dollar is expected to continue the Fed’s recent trend of placing the risks of inflation to the economy as greater than the risk of slow or negative economic growth. The new chief of the St. Louis Federal Reserve Bank was quoted Friday as saying the central bank should make fighting rising prices a top priority and other fed officials are on record as shifting their focus from growth to inflation. A strong stance by Bernanke could startle already edgy financial markets.

Thursday – May Retail Sales – Economists forecast that the government’s rebate checks will give a boost to retail sales. A negative surprise in this number could create more panic about a recession.

Thursday – Jobless Claims – This is a weekly release which takes a heightened significance after the big jump in the nation’s unemployment rate. It should also be a good indication of how successful college graduates have been at landing jobs.

Friday – Consumer Price Index – Economists already know that food and energy prices have increased at an alarming pace in 2008, what will be closely watched is the “core inflation” number to determine if inflation is hitting other sectors. An increase over 0.2% in core inflation will be bad news for the economy.

Friday – June Consumer Sentiment Index – The University of Michigan’s consumer sentiment survey will be dissected to determine if consumers believe the worst of the US economic slowdown is past them.

Interest rates will be greatly influenced by this week’s economic releases as well. Mortgage rates may decline if financial markets continue to selloff and Treasury yields drop, while short-term deposit rates may increase if it appears likely that the Fed may raise rates by the end of the year to thwart inflation.

Mortgage Rates Increase After 2 Weeks of Decline

Rate: 6.12 percent (30-year fixed) Average points: 0.4

Mortgage rates moved higher this week after plunging over the previous two weeks.

The average 30-year fixed rate rose 17 basis points, to 6.12 percent. A basis point is one-hundredth of a percentage point. In the previous two weeks, rates on the 30-year fixed had plunged by 44 basis points.

The average 15-year fixed — a popular option for refinancing — moved up 17 basis points, to 5.7 percent. The average jumbo 30-year fixed climbed 15 basis points, to 7.52 percent.

Adjustable-rate mortgages split for the second straight week. The one-year adjustable-rate mortgage was up 12 basis points, to 6.37 percent.

Meanwhile, the popular 5/1 ARM fell 12 basis points, to 6.04 percent. The 5/1 ARM has now fallen 40 basis points in two weeks.

Mortgage application activity took a nose dive for the week ending March 28, dropping a seasonally adjusted 28.7 percent from the previous week, according to the Mortgage Bankers Association. Applications for refinancing were down 38.1 percent, while applications for new purchases fell 11.8 percent.

The sharp downturn came one week after application volume had surged by nearly 50 percent. Application activity has fallen more often than not in recent weeks as mortgage rates have trended higher since hitting recent lows in January.

CD Yields Continue to Decline – 4/7/08

Yields: 1.94 percent (1-year CD yield); 2.75 percent (5-year CD yield)

CD yields continue to decline, although not as sharply this week as last. The average one-year CD yield fell 3 basis points this week to 1.94 percent.

The average five-year yield lost 2 basis points and is now paying a mere 2.75 percent. Jumbos held steady, though, with the one-year jumbo remaining at 2.12 percent, and the five-year at 2.84 percent.

Current CD Rate Yields

CDs yields remained fairly stable this week. The incessant chipping away of a basis point or 2 each week that we’ve been seeing for quite some time continues, but nothing that makes your knees buckle. Again, these yields can’t compensate for the damage inflation will do to your returns, so consider high-yield options.

The average one-year CD is yielding just 2.33 percent, 2 basis points less than last week. There are more than 20 institutions offering one-year CDs at 3.5 percent or better on Bankrate’s high-yield page linked to above. The average five-year CD yield stands at 2.94 percent, a loss of 2 basis points. Similarly, you’ll find several five-year CDs paying 4 percent or better in our high-yield section.

The one-year jumbo fell to 2.54 percent, a drop of 3 basis points from last week, and the five-year jumbo is at 3.02 percent, down 2 basis points.

30 Year Mortgage Rate Rises, ARM Shoots up

One week ago, you could have gotten a great rate on a 5/1 adjustable-rate mortgage to finance that dream home with a white picket fence in the suburbs.

How times have changed.

“The ARM market melted down basically in a week,” says Bob Walters, chief economist for Quicken Loans.

According to the latest Bankrate.com national survey of large lenders, the average rate on a 5/1 ARM shot up 49 basis points last week, to 6.21 percent.

The benchmark 30-year fixed-rate mortgage rose 7 basis points, to 6.39 percent. A basis point is one-hundredth of 1 percentage point. The mortgages in this week’s survey had an average total of 0.40 discount and origination points. Thirty-year rates are now 82 basis points higher than their January lows.

The benchmark 15-year fixed-rate mortgage rose 6 basis points, to 5.85 percent, and the 30-year fixed jumbo rose 17 basis points, to 7.6 percent.