When it comes to interest rates, it looks like lenders were the only real winners in May.
A sharp rise in benchmark rates barely benefited savers, but plenty of major loan products became substantially more expensive.
A more optimistic outlook for economic growth, a red-hot housing market and fears that the Federal Reserve could start tapering off its massive bond-buying program in the coming months led to relentless downward pressure on prices of benchmark 10-year Treasury notes — meaning yields rose steadily over the course of May.
Indeed, the 10-year Treasury is poised to end the month above 2%, a huge jump from the sub-1.7% yield seen at the end of April. The last time we saw this kind of selloff in the bond market was back in early March, when the 10-year peaked at 2.06% — but this time around it looks like those higher rates could stick.
The net result was that interest rates tipped in favor of lenders. True, yields on some popular savings products inched up in May, but then, many of the most popular loan products became much more expensive vs. a month ago.
Yields on money markets — a popular place for investors to stash cash — have remained pretty much stuck for months. The national average interest rate on a money market account slipped to 0.48% as of May 28 from 0.49% a month ago, according to data from Bankrate.com (RATE).
With the exception of a slight uptick in January, money markets have remained at essentially the same level since September.
Meanwhile, yields on jumbo money market accounts slipped for the second straight month after five months of not budging. The national average was unchanged at 0.61% in May, but it’s slowly trending lower. The rate stood at 0.62% in March after yielding an average of 0.64% from October through February.
Elsewhere, savings rates were mixed. Short-term savings rates were unchanged to lower, while most longer-term rates rose ever-so-slightly. Here are the annual percentage yields on some popular savings products as of May 28, according to Bankrate:
- National Average Rate on Interest Checking Account: 0.51%, no change
- Best Rate on Savings Account: 0.9% (Barclays [BCS], no minimum), down from 1% (CIT [CIT] Bank, $25,000 minimum) a month ago
- Best Rate on 1-Year CD: 1.05% (GE [GE] Capital Retail Bank, $25,000 minimum), no change for four months
- Best Rate on 3-Year CD: 1.35% (Barclays, no minimum), up from 1.31% (Virtual Bank, $10,000 minimum) a month ago
- Best Rate on 5-Year CD: 1.75% (Barclays, no minimum), up from 1.7% (Nationwide Bank, $500 minimum) a month ago
- Best Rate on 5-Year Jumbo CD: 1.75% (CIT Bank, $100,000 minimum), no change from a month ago (Nationwide Bank, $100,000 minimum)
At the same time, rates on the most common mortgage products lurched higher last month, and home loans got pricier too. Here are the average national rates offered on popular loan products as of May 28, according to Bankrate:
- 30-Year Fixed Mortgage: 3.75%, up from 3.47% a month ago
- 15-Year Fixed Mortgage: 2.9%, up from 2.71% a month ago
- 5/1 Adjustable-Rate Mortgage: 2.68%, up from 2.61% a month ago
- 30-Year Fixed Mortgage, Refi: 3.74%, up from 3.46% a month ago
- $30,000 Home Equity Line of Credit: 4.98%, up from 4.77% a month ago
- $30,000 Home Equity Loan: 6.17%, up from 6.25% a month ago