Bermuda's main banks announced they will cut their base interest rates by 0.5 percent -- meaning some borrowers will enjoy their lowest repayment rates in seven years.

The Bank of Butterfield will cut its Bermuda Dollar Base Rate by 0.5 percent to 5.25 percent, with effect from next Monday in the wake of the US Federal Reserve cut.

And the Bank of Bermuda will have lower mortgage and loan rates in April, with the announcement by Bank of Bermuda that it is cutting its base rate by 0.5 percent to 5.75 percent, with effect from April 1.

The Bank of Butterfield cut -- which will apply to mortgage and loan customers of the bank but not existing depositors or mortgagees on fixed rates -- means borrowers will benefit from the lowest rates they have had since 1994, when the base rate was introduced and the fixed seven percent interest rate was dropped.

"We are continuing to pass on the benefits of lower US interest rates to our customers who borrow from us at rates linked to the Bank's Bermuda dollar base rate'', said Richard Ferrett, executive vice president and chief financial officer.

"We are also reducing our US Dollar Prime Rate to eight percent effective the same date.'' Bank customers with variable rate mortgages will see their rates fall by 0.5 percent effective from June 25.

Customers with personal loans and mortgages at fixed rates of interest are unaffected by the change.

Mr. Ferrett said the bank is not reducing the interest rates paid to customers with either Strata or Passbook Savings accounts, for the time being.

"We recognise the importance of these savings accounts to a large section of our customer base and will look to maintain the current interest rate levels paid on these accounts for as long as possible,'' he said.

Bank of Bermuda senior vice president Danny Fox said: "We have a high number of customers with their mortgages tied to the base rate, and they will benefit from the cut in interest rates along with other loan customers.'' Mr. Fox added the bank had decided to cut rates paid to depositors, effective April 1.

Fed cuts rates Editorial, Page 4