SAN ANSELMO, Calif. (February 1, 2010) – 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, reveals that people are shifting deposit money from term accounts such as certificate of deposits, to more liquid accounts such as savings and money market. This shift is an indication of unease about the prospect of economic recovery and fear of hyper inflation. Nearly a quarter of a trillion dollars has shifted to liquid accounts in the first nine months of 2009.
The latest analysis by Market Rates Insight shows that although total deposits in FDIC institutions grew from $9,035 billion to $9,100 billion during the first nine months of 2009, but term deposits, such as CDs that tie the money up for a period of time, declined from $2,593 billion to $2,315 billion, a decline of $278 billion or 10.7 percent. The findings of this analysis indicate that people are saving more, but they are less likely to tie their money in a term account, and increasingly are opting for deposit accounts that allow them to quickly and easily withdraw their money.
The decline in term deposits occurred in both accounts of less than $100,000, as well as accounts of over $100,000. Term deposits of $100,000 or less declined from $1,371 billion to $1,235 billion, a decline of $136 billion, or 9.9 percent. Term deposits of over $100,000 declined from $1,222 billion to $1,080 billion, a decline of $142 billion, or 11.6 percent.
“This type of ‘defensive’ deposit practice may indicate that depositors are not confident about the prospects of an economic recovery, and possibly fearful of looming hyper inflation,” said Dan Geller, Ph.D. Executive Vice President at Market Rates Insight. “As a result, depositors are placing their money in ‘quick-out’ accounts in case they need the money right away, or to protect it against high inflation.”
The complete analysis can be viewed on the Market Rates Insight website at this location: http://www.marketratesinsight.com/docs/sa2.1.10.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 |
Dr. David Kleiman
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