New Historic Lows

December 16th, 2008

Today the 30-year treasury bond dropped to below 3% (2.95%) for the first time in history.

The Fed is also poised to lower the target rate for Fed Funds to 0.5%. Some think they might even go lower, but I think they want to leave room for another cut if the economy doesn’t start improving.

6-month CD rates will most likely fall to the 2.00% to 2.50% range. 1-year rates will probably be between 3.00% to 3.50%. The yield curve will probably be somewhat flat on the 2-Year to 4-Year, topping out around 3.70% to 3.80%. Finally the 5-year will probably slip to 4.25% to 4.50%.

One strategy that we have helped people with is investing in low penalty CDs. You may want to consider investing some funds in 5-year CDs, but look for 90-Day Early Withdrawal Penalties. You’ll pick-up some yield over the shorter-term CDs and if rates turn around in the next year or two, it won’t be that expensive to close the CD and move it to one with a better rate.

Hopefully, I’ll have a couple of more posts before the New Year. If not, have a Merry Christmas.

Countrywide Bank has slowed down their first mortage program, but are beginning to offer a Countrywide Reverse Mortgage program. I’m not sure how thrilled I am by that.

cd :O)

-- By +Chris Duncan

5 Responses to “New Historic Lows”

  1. Ken Says:

    About early withdrawals from CDs, I’ve noticed many banks state in their disclosures that they are not required to allow an early withdrawal. If they consent to the early withdrawal, then the penalties apply. Have you ever heard about a case where a bank makes use of these clauses and refuses an early withdrawal? Should these clauses be seen as something that will be used only in very rare cases?

  2. Administrator Says:

    Hey, Ken. Glad to see you visiting. In our history, we have had two banks refuse to release the funds. In the one case, they ended up working with us and negotiating a higher penalty and releasing the funds. The other bank would not release the funds.

    Some of our clients would issue a letter and have the bank sign, indicating that they would allow for the closure at the stated penalty. This is quite effective. Most banks are willing to sign because they really don’t intend to not allow the withdrawal.

  3. Tom Says:

    I like this idea on the early withdrawal but I’m with Ken, I don’t know of any banks that offer this? Can you possibly list a few?

  4. Tom Says:

    Sorry about that question.. for some reason your post didn’t pop up until I made my comment.

  5. Administrator Says:

    We do know a few and even have a couple that will pay us. I wish we had a way to give out information for “free”, but our current Ad Revenue doesn’t really cover the costs of our information.

    In addition, many of the banks we work with don’t really want their information splattered across the internet, we act as a funnel for them.

    We can pay for referrals. We have a 5Y at 4.80% with a 6-month penalty, available for Institutioal investors only, $100K minimum. We have a 5Y at 3.50% with a 90-Day penalty good for anyone, $50K minimum.

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