New Market Rates Insight Research Links Low Deposit Interest Rates to Low FDIC Insurance Fund Balance
Analysis Shows for Every $4.8 Billion Reduction in the FDIC Deposit Insurance Fund, Rates for CDs and Money Markets Drop by 10 bps.
San Anselmo, CA, October 03, 2009 --(PR.com)-- A new analysis from Market Rates Insight (MRI, www.marketratesinsight.com), a leading research firm that tracks rates for deposits, loans, and fees for financial institutions, found that the level of the FDIC Deposit Insurance Fund (DIF) balance has a substantial and significant impact on the average interest rates for bank deposit products. When the DIF balance was higher, the average APY was higher, and deposit rates have dropped along with the balance in the DIF.
In the first quarter of 2007, when the FDIC insurance fund balance was around $50 billion, the national average interest rate for CDs and Money Market was 4.25 basis points. Today, the FDIC insurance-fund balance is about $10 billion, and the national average interest rate for CDs and Money Market is 1.77 bps.
“It is clear that the level of the FDIC insurance-fund balance impacts deposits’ interest rates” said Dr. Dan Geller, Executive Vice President at Market Rates Insight, “What we don’t know is how the pre-paid replenishment of the fund now being proposed will impact deposit interest rates.”
The latest research examines the linear relationship (Regression) between the DIF quarterly balances and the interest rates for CDs and MM for the past five years (Q4 2004 to Q2 2009). The raw data for the FDIC DIF balances was obtained from the FDIC Quarterly Reports, and the raw data for the national average APY for deposit products was obtained from Market Rates Insight’s database.
The complete analysis can be viewed on the Market Rates Insight website at this location: http://www.marketratesinsight.com/docs/FDICCausingRateChange_100109.pdf.
About Market Rates Insight
For more than two decades, Market Rates Insight (MRI) has been helping subscribers price with precision by providing banks, thrifts, credit unions, and other financial institutions with accurate market intelligence on deposits, loans, and fees. MRI uses deposit surveys, mortgage and consumer loan surveys, fee and feature studies, scanned ads, new product alerts, and market share and money fund reports to give subscribers the intelligence they need to profitably react to emerging trends. MRI’s products include customized, web-enabled market research tools that report on rates, as well as online searchable databases, gauges, alerts, and dashboards that aggregate key client data to provide real-time views on how they stack up against market competitors.
Market Rates Insight is located in San Anselmo, California. For more information, see www.marketratesinsight.com.
Contact:
Dr. Dan Geller
Market Rates Insight
415-448-8813
Dan.Geller@MarketRatesInsight.com
Tom Woolf
Market Rates Insight
(415) 259-5638
tom.woolf@marketratesinsight.com
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In the first quarter of 2007, when the FDIC insurance fund balance was around $50 billion, the national average interest rate for CDs and Money Market was 4.25 basis points. Today, the FDIC insurance-fund balance is about $10 billion, and the national average interest rate for CDs and Money Market is 1.77 bps.
“It is clear that the level of the FDIC insurance-fund balance impacts deposits’ interest rates” said Dr. Dan Geller, Executive Vice President at Market Rates Insight, “What we don’t know is how the pre-paid replenishment of the fund now being proposed will impact deposit interest rates.”
The latest research examines the linear relationship (Regression) between the DIF quarterly balances and the interest rates for CDs and MM for the past five years (Q4 2004 to Q2 2009). The raw data for the FDIC DIF balances was obtained from the FDIC Quarterly Reports, and the raw data for the national average APY for deposit products was obtained from Market Rates Insight’s database.
The complete analysis can be viewed on the Market Rates Insight website at this location: http://www.marketratesinsight.com/docs/FDICCausingRateChange_100109.pdf.
About Market Rates Insight
For more than two decades, Market Rates Insight (MRI) has been helping subscribers price with precision by providing banks, thrifts, credit unions, and other financial institutions with accurate market intelligence on deposits, loans, and fees. MRI uses deposit surveys, mortgage and consumer loan surveys, fee and feature studies, scanned ads, new product alerts, and market share and money fund reports to give subscribers the intelligence they need to profitably react to emerging trends. MRI’s products include customized, web-enabled market research tools that report on rates, as well as online searchable databases, gauges, alerts, and dashboards that aggregate key client data to provide real-time views on how they stack up against market competitors.
Market Rates Insight is located in San Anselmo, California. For more information, see www.marketratesinsight.com.
Contact:
Dr. Dan Geller
Market Rates Insight
415-448-8813
Dan.Geller@MarketRatesInsight.com
Tom Woolf
Market Rates Insight
(415) 259-5638
tom.woolf@marketratesinsight.com
###
Contact
Market Rates Insight
Tom Woolf
415-259-5638
www.marketratesinsight.com/new
Tom Woolf
415-259-5638
www.marketratesinsight.com/new
Contact
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