Rate increases by multiple banks on Friday June 15 could signal the start of an upward trend as banks compete with higher Treasury note yields.

Savers who want to lock in high CD rates may get their chance. This past week, the 10-year Treasury note yield moved up over the 5% mark and banks have responded with rate increases of their own.

On Friday June 15, Countrywide Bank, EverBank, GMAC Bank, IndyMac Bank, and Intervest National Bank all raised rates on certificates of deposit. Earlier in the week, Advanta Bank, NetBank, and UFB Direct raised CD rates as well.

The highlight of all these rate increases is Countrywide Bank’s 5.50% annual percentage yield (apy) on the 18-Month CD. The 5.50% yield was just recently offered as a special at Countrywide’s Florida offices only. Now that it is a nationally available rate, other banks may feel the pressure to boost yields on their own CD accounts.

The 5.50% yield is in itself a newsworthy event. In 2006, we had a pick of CD yields available nationally that paid 5.75% apy and higher. But in 2007, 5.50% apy had been virtually a local-only deal. The top yields on nationally available certificates of deposit have been hovering between 5.20% apy and 5.45% apy for the last few months.

Those yields created little incentive for savers to choose CDs over savings accounts that paid anywhere between 5.05% apy and 6.00% apy and offered access to the cash at anytime. (HSBC Direct offered a promotion 6.00% apy on new money earlier this year and FNBO Direct is currently offering a 6.00% apy promotion.)

But the yield trend may be shifting – at least a little bit.

Right now there is no reason to expect to see certificates earning 5.75% or the big enchilada – 6.00% - but we are only a few basis point away from 5.50% apy on CD terms of 6 months to 5 years. That’s a completely realistic level to reach within the next few weeks.

How much higher rates will go may depend mainly on actions (or whispers) by the Federal Reserve. What can be predicted with some level of certainty is that big rate drops on CDs are unlikely to happen for the remainder of the year. The general consensus has changed from expecting a cut in the Fed Funds Rate this year to a possible cut next year.

That should be enough time to see rates float upwards to more enticing levels on certificates of deposit.