Reflecting rapid increases in interest rates and fears that mortgage money is becoming scarce, government agencies yesterday announced higher interest rate ceilings for certain deposits at the nation's financial institutions.
The authorization of higher rates for savers was designed mainly to keep money in thrift institutions at a time when other high-yielding investment yields have begun to attract money out of savings accounts.
In addition, the Federal Home Loan Bank Board yesterday confirmed what home buyers have discovered recently -- that mortgage interest rates rose again during March for the fifth consecutive month.
By eariy April, the Bank Board said, the national average interest rate for new single-family homes was 9.3 percent and the rate for previously occupied houses was 9.35 percent -- the highest levels since January 1975.
In metropolitan, home mortgage rates now average between9 7/8 percent and are expected to increase to 10 percent shortly -- a level reached this week in the San Francisco area.
To help provide more funds and cool off the upward pressure on interest rates "floating" interest rate certificates will be permitted starting June 1 at savings and loan associations, mutual savings banks and commerical banks.
The interest rate ceiling will move up and down - or float -- depending on rates for six month Treasury bills. The certificate rate will be 1/4 of a percent above the bill rate.
In addition, a longer-term certificate was approved, requiring maturities of eight years or more.
A joint announcement by the Bank Board Federal Reserve Board and Federal Deposit Insurance Corp., said the new offerings to customers would be as follows:
A short-term money market certificate, with the ceiling interest rate changing weekly for new deposits. The certificate must be issued in minimum denominations of $10,000 and the rate will be tied to the average yield on new six-month Treasury bills. Bills auctioned last Monday carried an average yield of 6.986 percent the seiling rate for the first of the new 26-week certificates will be pegged to a Treasur
An eight-year certificate with a fixed maximum rate of interest. These certificates may be issued in minimum denominations of $1,000 at a maximum interest rate of 7.75 percent for commerical banks and 8 percent for S&Ls or mutual saving banks.
Both of the new instruments are subject to existing penalties on early withdrawal - loss of 90 days' interest and payment of any remaining interest at the standard passbook savings account rate (5 1/4 percent for federal S&Ls).
As a result of yesterday's decisions, the maximum permissible rate paid by all institutions on new deposits for Individual Retirement (IRA) and Keogh accounts also will move to 8 percent.
Bank Board Chairman Robert H. McKinney said the new savings certificates "are simply more tools to insure that mortgage money remains readily available at realistic rates."
McKinney, whose agency supervises federally-chartered S&Ls, termed the decisions as "not drastic or hastened responses to a crisis situation since money is currently available . . . and the demand for this money is strong."
However, statistics published by the FHLBB earlier this month showed that new savings deposits at thrift institutions declined in the first quater of 1978 compared with last year.
Although no figures are available on all S&Ls in the Washington area, 20D.C. and suburban members of the Metropolitan Washington Savings and loan League reported that new savings and total withdrawals during March were about equal.
New savings for the month rose to $209.8 million compared with $182.1 milion in the same month last year but withdrawals soared to $209.6 milion from $157.3 million a year earlier. Mortgage volume also declined in March at the 20 S&Ls to $86.8 million from $97 million.
The U.S. League of Savings Associations yesterday applauded the government step, particularly the introduction of the long-term certificate. Thomas Owen, president of the area's largest S&L, Perpetual of Washington, said the new ceilings are "a reasonable attempt to deal with the problem."
John Stadtler, chairman of National Permanent Federal, said the new rates are "necessary" as temporary policy to permit person with less than $100,000 to invest to take advantage of higher yields. His institution will offer the new certificates as of June 1.
Earlier this week, Comptroller of the Currency John Heimann said the government should eliminate regulation that limit bank and S&L interest rates because they "penalize the people who could least afford to be penalized."
In another development, the House Ways and Means Committee approved legislation to permit the Treasury to increase the interest rate on savings bonds; the ceiling is now 6 percent.