Top 5-year CD rates start rebound without Fed's help

White piggy banks with stacks of money and moneybag

Although we're still in the same waiting-on-the-Fed holding pattern we've been stuck in all year, yields on 5-year CDs have already risen a little in 2015.

After a dismal start to the year — when the best nationally available return retreated from 2.35% to 2.25% APY and then stalled there for the better part of six months — this summer saw a boost in the lead rate to 2.45% APY.

And unlike the 2.50% deal Live Oak offered for four days in February, this offer from E-Loan has stuck for more than three months now, making it the best sustained lead we've seen since September 2011.

We're also aware of more than a dozen local deals that pay even better than E-Loan, earning lucky savers as much as 3.05% APY.

Those deals are certainly better than what we were seeing back in May 2013, when 5-year rates hit their recession-driven lows, with a top national yield of just 1.75%.

Perhaps the most critical player behind the bounce in 5-year CDs has been E-Loan, an online division of Popular Community Bank.

Banking experts tell us Popular Community — which operates almost 50 branches in New York, New Jersey and South Florida — is a healthy, on-the-rise bank that's enjoying robust growth in commercial lending and therefore needs to grow its deposit reserves to support those loans.

To attract deposits, E-Loan began offering the top national 1-, 2-, 3-, 4- and 5-year returns — in some cases by a margin of almost two-tenths of a percentage point — although since then it has surrendered top billing among 1-year CDs and now shares the 4-year lead.

TOP 5-YEAR CD RATES: Nationally Available Bank Deals

Bank APY Minimum Deposit
E-Loan 2.45% $10,000
American Bank 2.27% $500
Barclays 2.25% No minimum
Synchrony Bank 2.25% $25,000
First Internet Bank of Indiana 2.22% $1,000
CIT Bank 2.20% $1,000
Colorado Federal Savings Bank 2.15% $5,000
State Bank of India - Chicago 2.12% $2,500
State Bank of India - New York 2.12% $5,000
Capital One 360 2.10% No minimum
Sallie Mae Bank 2.10% $2,500
Salem Five Bank 2.10% $10,000
State Farm Bank 2.05% $500
American Heartland Bank & Trust 2.05% $1,000
North American Savings Bank 2.02% $1,000
EverBank 2.01% $1,500
Ally Bank 2.00% No minimum
1st Source Bank 2.00% $500
GE Capital Bank 2.00% $500
Hudson City Savings Bank 2.00% $500
Gulf Coast Bank & Trust 2.00% $2,000
Discover Bank 2.00% $2,500

Of course, there are always some lucky savers who can out earn the top national rate by purchasing certificates of deposit from a community bank or credit union.

These institutions often offer chart-topping yields to savers who live or work nearby, or are willing to jump through a hoop or two.

That's why smaller financial institutions promoting local deals from New York City and the Ohio River Valley to the Great Plains and desert Southwest, have also played a role in driving up rates.

Among the best local and regional offerings are 5-year CDs currently paying up to 3.05% APY.

TOP 5-YEAR CD RATES: Credit Union, Community Bank Deals

Bank States Months APY
Self Reliance New York Federal Credit Union New York 60 3.05%
Four Corners Federal Credit Union New Mexico, Arizona, Colorado, Utah 60 2.78%
General Electric Credit Union Ohio, Indiana, Kentucky 60 2.75%
Deere Employees Credit Union Illinois, Iowa 60 2.65%
IH Mississippi Valley Credit Union Illinois, Iowa 60 2.63%
Green Mountain Credit Union Vermont 60 2.53%
Bank of Utica New York 60 2.50%
City Credit Union Texas 60 2.50%
Cove Federal Credit Union Kentucky 60 2.50%
Kemba Credit Union Ohio, Indiana, Kentucky 60 2.50%
Ukrainian Selfreliance Federal Credit Union Pennsylvania, New Jersey 60 2.50%
Union Bank & Trust Nebraska, Kansas 60 2.50%
Vibe Credit Union Michigan 60 2.50%
Marion Community Credit Union Ohio 55 2.32%
Keystone United Methodist Federal Credit Union Pennsylvania 55 2.25%

If you think you might qualify for any of these deals, they're worth investigating because they all pay about three times more than the current average 5-year return of 0.85% APY, according to our weekly nationwide survey of banks and thrifts.

The average return bottomed out at 0.77% APY in the summer of 2013 and gradually rose to 0.89% APY early this spring. But since May, it's wavered between 0.84% and 0.87% APY.

Rewind to February 2007 — before irresponsible mortgage lending led the economy over a cliff and the Fed stepped in to boost the economy with a policy of repressed interest rates — and the national average return for 5-year CDs was 4.02% APY.

While that kind of yield is hard to imagine in the rate climate we've been suffering for years now, it's a reasonable return for savers to expect when you look at rate histories before the financial crisis.

For most of this year, the expectation has been that the Fed would kick off a series of rate hikes in 2015.

But so far that hasn't happened, and there's just one rate-setting committee meeting left this year, scheduled for Dec. 15-16.

Many expect a hike will indeed come out of that meeting, but letting the 2015 window close and deferring the first increase until after the new year is also a distinct possibility.

Whether the long-awaited event occurs next month or next quarter, that's when CD rates in all terms will gradually begin improving, and 5-year yields can certainly use the boost.