Short-Term Loan Rates Rise AtCUs
WASHINGTON - (08/06/04) -- Last month's hike in short-terminterest rates by the Federal Reserve has pushed up short-term loanrates at credit unions, but has had no effect on dividend(interest) rates. Data compiled by DataTrac Corp. shows thataverage rates charged by credit unions for new and used car, homeequity loans and one-year ARMs, have risen between four and sevenbasis points since July 1, when the Fed boosted its target rate forovernight FedFunds by 25 basis points. And several observers arepredicting those rates will rise again next week, when the Fed isexpected to lift the key short-term rate again by 25 bps. Somecredit unions have boosted their rates even more since then. ScottMainwaring, chief financial officer for Vystar CU, told The CreditUnion Journal the Jacksonville, Fla., credit union has bumped upits short-tem rates by around 25 bps since the Fed.'s action. AndBrian McVeigh, CFO for State Employees CU, Lansing, Mich., saidthey have hiked their rates by around 10 bps for short-termproducts. At the same time, average rates credit unions pay ontheir savings products have barely budged, according to DataTrac.The average for regular share accounts has actually declined sincethen from 73 bps (0.73%) to an all-time low of 72 bps; while theaverage for share draft (checking) has held steady at 44 bps; andfor money market accounts it has risen a single bp to 93bps.