Most Banks Keeping Consumer Rates Steady: Market Conditions Preclude Need to Follow
When the Federal Reserve Board moved to curb inflation by boosting interest rates this year, shudders ran through Wall Street. Stock and bond prices plunged, and it was widely assumed that borrowers and savers across the country would soon be seeing higher rates.</br></br>So far, the conventional wisdom has not proven true. Although mortgage rates jumped sharplyÛÓbecause they are tied to the Wall Street capi- tal marketsÛÓmany of the rates that banks pay to depositors or charge for ] consumer loans have remained steady or risen only slightly.</br></br>The reason is market conditions in , the banking industry. Competition to ÐÊ attract loan customers has kept down rates charged for auto and other , loans.</br></br>And banks have so much money ' available that they do not have to Û¢ raise rates paid to customers to at- * tract depositors.	'</br></br>Û÷It's an interesting sort of situation. The rules of thumb you would have used [in the past] to look at bank pricing donÛªt seem to be holding," said Alfred Smith, principal economist at NationsBank Corp. in Charlotte, N.C. The prime rateÛÓwhich banks charge their best customersÛÓhas clicked upward a quarter of a point, taking with it certain types of loans that are tied to it, notably home equity lines of credit. But a quick check of banks here and in other parts of the country shows that the reaction on other loan and deposit products has been mild so far.