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Long-term CD rates in a handful of states have bucked the downward trend recently, according to a report released by Market Rates Insight on Tuesday.
The financial services consulting firm announced Tuesday that six states showed increases in long-term CD rates in the first quarter of 2012. CD rates in some states showed increases in maturities through three years, while others showed increases in five-year yields.
| Basis point increase | Five-year CD yield | Three-year CD yield | |
| Illinois | 8 | 1.19 percent | N/A |
| Massachusetts | 2 | 0.86 percent | N/A |
| Michigan | 1 | 0.93 percent | N/A |
| Ohio | 1 | N/A | 0.48 percent |
| Pennsylvania | 1 | N/A | 0.59 percent |
| West Virginia | 1 | N/A | 0.5 percent |
"These findings might be an indication of a trend reversal in interest rates on CDs," Dan Geller, Market Rates Insight executive vice president, said in the press release.
"The increase in long-term CDs in these states could be an early signal that the downward trend in interest rates that started five years ago may be reversing course," he said.
The numbers aren't hugely encouraging -- no one will be dining out on 8 basis-point increases, much less 1 or 2. With any luck though -- and continued economic growth -- the upward trend will catch on.
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Long-term certificate upward trend is an abnormality to capture funds in the short-term. But the issue is the other side of the balance sheet – loans. Loans remain at historical lows and if do not rise; certificate rates will also remain low. The trend will not be flowed by the industry. The upward rates are likely from small to mid-size institutions looking to increase deposits level.