Study: Low Deposit Rates Offsetting Favorable Mortgage Rates

New research from finance information website ""MoneyRates.com"":http://www.money-rates.com/ suggests borrowers may not be benefitting from low mortgage interest rates as much as other analysts say.

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The first figures from the site's new Consumers Lost Interest Percentage (CLIP) Index show the difference between what consumers earn on one-month certificate of deposit (CD) rates and what they spend on 30-year mortgage rates is now 4.4 percent, nearly 55 percent higher than the 40-year average of 2.83 percent.

In fact, MoneyRates says, the gap between deposit rates and mortgage rates hasn't dropped below the 2.83 percent average since October 2008, meaning consumers have likely 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,"" said Richard Barrington, CFA, senior financial analyst for MoneyRates. ""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,"" Barrington added.

So far this year, the CLIP Index has increased more than 1 percentage point over the end of 2012, widening the gap between deposit rates and interest rates even further. With mortgage rates on the rise, MoneyRates expects the situation to grow worse.

That's not to say consumers can't take steps to improve their own situation. In order to reduce the effects of the growing gap, Barrington urges potential borrowers to shop around for both mortgage and deposit rates, maintain good credit to qualify for the lowest rates, and consider shorter mortgages for lower loan rates--and longer deposit terms for higher rates.