It’s not everyday an email from the Connecticut Attorneys Title Insurance regarding a press release from the Department of Banking catches my attention but today an email did just that.
The Connecticut Department of Banking has released the new minimum statutory interest rates for mortgage escrows and residential tenant security deposits, pursuant to Conn. Gen. Stat. §§ 49-2a and 47a-21(i), respectively.
For the first time in many years, the minimum rate set for tenant security deposits will differ from the rate set for mortgage escrows, due to a recent legislative change. That legislation, Public Act 11-94, removed the statutory requirement that the established minimum rate for tenant security deposits shall be no less than one and one-half percent, regardless of prevailing interest rates. With the removal of this language, the yearly rate will now reflect these prevailing rates, with no statutory minimum.
Another legislative proposal would have removed the one and one-half per cent minimum rate as to escrow accounts held by mortgage lenders. This legislation was unsuccessful, however, and therefore the interest paid on mortgage escrow accounts continues to be subject to the one and one-half per cent minimum, regardless of prevailing interest rates.
The 2012 minimum interest rate for residential tenant security deposits is .16%, and the rate for mortgage escrow accounts is 1.5%.
Looking at interest rates from a local(ish) bank, it appears that a prevailing rate is below the former minimum rate of 1.5%.