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Butterfield raises lending rates

  • Butterfield Bank: borrowers will pay more in interest after the US Federal Reserve announced a quarter-point rise in its Fed Funds rate today

Butterfield Bank will increase its lending rates by a quarter of a percentage point after the US central bank raised its key benchmark interest rate today.

HSBC Bermuda said it had made no decision yet on how it will respond.

The Fed’s quarter-point increase of its Fed Funds rate was widely expected and reflects a strengthening US economy.

In a statement sent out via the Bermuda Stock Exchange, Butterfield said: “The Bank of NT Butterfield & Son Ltd announced that, in alignment with today’s 25 basis point increase in the US Federal Funds Rate, the Bank has adjusted its Bermuda dollar base rates on Bermuda dollar loans.”

The bank added: “The Bermuda dollar base rate for residential mortgages and consumer loans will increase from 4 per cent to 4.25 per cent. The Bermuda dollar base rate for corporate loans will increase from 4.25 per cent to 4.5 per cent.

“The rate increase on consumer and corporate loans takes effect immediately. The rate increase on residential mortgages will take effect on June 14, 2017.”

However, there will be no boost for savers as “Butterfield is not adjusting deposit rates at this time”.

Butterfield also announced it would raise its base lending rates after the Fed’s quarter-point rise last December.

However, instead of raising monthly borrowers’ repayments it lengthened the durations of mortgages and loans.

HSBC Bermuda did not increase its lending rates in December.

A spokesperson for HSBC Bermuda said this afternoon: “HSBC Bermuda considers multiple factors — including but not limited to, the Fed rates — in our ongoing reviews of the bank’s lending and savings rates.

“Any impact on the rates will be communicated through our usual channels.”

The US central bank said in a statement today that a strengthening job market and rising prices had moved it closer to its targets for employment and inflation.