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Bank raises lending rates after Fed hike

Rate hike: Butterfield raised its lending rates in line with the US Federal Reserve’s quarter-point increase

Butterfield Bank has jacked up lending rates by 0.25 of a percentage point after the US Federal Reserve yesterday raised its short-term rates by the same amount — the third American increase since December.

The Butterfield base rate for residential mortgages and consumer loans will go up to 4.5 per cent from 4.25 per cent.

And the base rate increase for corporate loans will rise to 4.75 per cent from 4.5 per cent.

The increase on consumer and corporate loans takes effect immediately.

The increase on residential mortgages will take effect on September 12.

Butterfield, however, did not say if the change would mean an increase in interest rates on savings at the bank.

Rival bank HSBC Bermuda was keeping its cards close to its chest.

A spokeswoman for the bank said: “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.”

Clarien Bank did not respond to requests for comment by press time last night.

The Federal Reserve move takes its Fed Funds rate to a 1 to 1.25 per cent range, and is the fourth increase in a sequence that began in December 2015.

The American increases are seen as a reversal of the Fed’s moves to battle the financial crisis and the recession.

In 2007, as recession began to bite, the benchmark federal funds rate was 5.25 per cent.

The Federal Reserve has signalled it will increase short-term rates once more before the end of the year and three times next year.