Deposits Drop, New Mortgages Climb at S
For the second month in a row, deposits declined at savings and loan institutions as savers withdrew nearly $1 billion more than they deposited in October, the Federal Home Loan Bank Board reported Friday.
The bank board, which regulates most savings and loan institutions, also said that new mortgage loans rose to near-record volumes last month.
In the first 10 months of 1985, deposits have fallen by $4 billion overall, compared to deposit growth of $47 billion during the same January to October period last year, the board said.
In October, withdrawals topped deposits by $997 million, the bank board reported.
The decline in deposits, although not as pronounced as the $5.1-billion decrease in September, follows a general yearlong trend of reduced savings.
The September decrease was the largest of the year. Economists said it was directly related to the giant increase in auto sales that month as depositors dipped into their savings to help finance new car purchases.
John A. Tuccillo, chief economist for the National Council of Savings Institutions, said the continuing decline in deposits reflects both overall decreases in savings by Americans and new federal rules that he said have limited the growth of financial institutions.
“This year has clearly been one of weak savings flows,” he said.
The Commerce Department reported last week that personal savings were at only 2.9% of after-tax income in October, about half the traditional level.
The bank board said that mortgage loans closed during October totaled $18.4 billion, up from $17.6 billion in September and the second-highest amount on record, surpassed only by the $19.8 billion of closings of June, 1984.
Total deposits in large certificates of deposit fell from $114.1 billion in December, 1984, to $107.1 billion in October, the bank board reported.