Gap Between Today’s Mortgage and Deposit Rates Offers Consumers a Historically Poor Deal

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New research by indicates that the spread between lending rates and deposit rates has now exceeded its average for longer than any time in recent history – a scenario that benefits banks and squeezes consumers.

The notion that low mortgage rates have favored consumers has been a bit of an illusion; it has favored borrowers but not savers. In effect, banks have been making consumers pay for the financial crisis.

While banks have always used the gap between lending rates and deposit rates to generate revenue, that gap today is well above its historical average – and it has stayed above that average for longer than any period in the last four decades, according to new research by

The first figures from the new Consumers Lost Interest Percentage (CLIP) Index reveal that the difference between one-month CD rates and 30-year mortgage rates is now 4.4 percent – about 55 percent higher than its 40-year average of 2.83 percent. This gap, which hasn’t been below 2.83 percent since October 2008, suggests that consumers have been getting a below-average deal from banks for nearly five years.

“The notion that low mortgage rates have favored consumers has been a bit of an illusion,” says Richard Barrington, CFA, senior financial analyst for “It has favored borrowers but not savers, and when you take the two on balance, the consistently high level of the CLIP Index indicates that banks have been getting the better of the deal overall. In effect, banks have been making consumers pay for the financial crisis.”

While the gap between these rates remains below its all-time high of 6.2 percent from August 1982, its current reading is among the highest 20 percent recorded in the last 40 years. So far, 2013 has brought sharp increases to the gap between one-month CD rates and mortgage rates, suggesting that even less-attractive banking conditions for consumers could still be ahead.

“This is a bad situation getting worse,” says Barrington. “The CLIP Index has risen by more than a full percentage point so far this year – and it was already above average when the year began.”

Consumers shouldn’t accept this trend without a fight, Barrington says. There are still ways they can reduce the negative effects of the growing gap between lending and deposit rates.

“These steps can include comparison shopping for both mortgage and deposit rates, maintaining good credit to qualify for the lowest rates, considering shorter mortgages for lower loan rates and longer deposit terms for higher deposit rates,” Barrington says.

For the full analysis, please see the full feature: “How badly are consumers being clipped by banks?

The CLIP Index uses one-month CD rates from the Federal Deposit Insurance Corp. (FDIC) and 30-year fixed mortgage rates from the Freddie Mac Primary Mortgage Market Survey to calculate the current and historical gaps between the short-term deposit rates and long-term lending rates.

About has been a leading source of information on bank rates, personal finance, savings accounts and investing since 1999. The site provides some of the highest rates on certificates of deposit, money market accounts and high-yield savings accounts. is owned and operated by QuinStreet, Inc. (NASDAQ: QNST), one of the largest Internet marketing and media companies in the world. QuinStreet is committed to providing consumers and businesses with the information they need to research, find and select the products, services and brands that best meet their needs. The company is a leader in ethical marketing practices. For more information, please visit

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Alex Bryant
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