Did You Know?

Interest rates have been headline news for well over a year. In an effort to tame inflation, the Federal Reserve has increased mortgage interest rates with regularity over the last year-plus. While the cost to borrow money has increased, individuals likely noticed that the reward for saving money has not increased along with it, as interest rates for savings accounts have remained low. In fact, the annual percentage yield (APY) as of February 2023 was 0.24 percent, while the average fixed mortgage rate in September 2023 remained well north of 6 percent. An assortment of variables have combined to lower savings account interest rates, but numerous analysts point to banks having more deposits than they require to issue loans. When that happens, banks do not need to attract additional deposits, which they typically do by offering higher savings account interest rates. Without that incentive, savings account interest rates have remained low, meaning account holders will continue to pay considerably more to borrow money than they will earn when they save it.