The rise in interest rates is paying off in unusual ways:
-- Borrowers are getting a break on consumer loan rates.
-- Savers are earning more because banks are raising CD rates.
Banks typically raise loan rates faster, but aren't now because of fierce competition for growing demand.
"Banks are afraid to raise loan rates," says Robert Heady of Bank Rate Monitor.
Rising interest rates have investors worried, however. The Dow Jones average closed down almost 46 points - and below 3800 - Monday.
But savers and borrowers are happy for now.
Banks have boosted rates paid on certificates of deposit, which attracts more money for banks to loan out.
Before last Tuesday's Federal Reserve increases in key rates, the average one-year CD rate was up 1.86 percentage points, to 4.93%.
Banks also have boosted the prime rate 2.5 percentage points, to 8.5%, this year to keep pace with Fed increases.
But rates on consumer loans - three-quarters of which still carry fixed rates - haven't kept up with the prime, which determines the rate on many personal, home equity and auto loans.
Bankers say they need low loan rates to attract business.
"In this tight market, you'd be killing yourself if you passed on all of your prime rate increase," says Tom Kaplan of CoreStates Bank, Philadelphia.
The impact of the Fed's most recent rate hike will take some time to filter down to consumer loans. Some average rates, through last Tuesday:
-- Unsecured personal loans were at 15.65%, up less than half a percentage point this year, says Bank Rate Monitor.
-- Auto loans were up just over one percentage point, to 8.96%.
-- New home equity loans were 8.34%, up 1.25 percentage points, Heady says.
Rates on existing home-equity credit lines, which typically float 2 percentage points above the prime, will soon be 10.5%.
