Deposit Rates Expected to Remain Near Historic Lows in 2012
Falling rates on deposits at credit unions may continue to chip away at savings growth gains within the industry.
According to CUNA Mutual Group’s December Credit Union Trends Report, low rates have discouraged large deposit inflows and in turn, reduced the annual savings growth to 4.1%.
During the past 12 months, certificates of deposits at credit unions declined $11.7 billion or 5.3%, with the average yield on a one-year CD falling 28 basis points to 1.02%, read the report, which tracked data through October.
Still, despite national average regular share yields falling to 0.28%, regular shares were up 10.5% year-over-year, and the $24.8 billion increase accounted for almost 75% of all savings growth.
“Members with money are choosing liquid deposit accounts, not having to sacrifice much yield and anticipating higher rates in the future,” the report read. “Members with modest cash flow resources are choosing to pay down debt as the best way to improve their household finances.”
As a result, savings and asset growth are expected to remain well below trend as credit unions “struggle to profitably deploy existing assets,” according to the report. Rates paid on deposits are also expected to remain near historic lows throughout 2012.