Clarien increases base lending rate
Clarien Bank has become the second island-based financial institution to increase its Bermuda dollar base lending rate by 50 basis points, or 0.50 per cent, following the US Federal Reserve rate increase earlier this month.
Butterfield Bank was the first to raise its rate. HSBC and Bermuda Commercial Bank have not followed suit.
Clarien said effective June 1, the Bermuda dollar base rate for personal mortgages will increase from four per cent to 4.5 per cent, and the rate for commercial mortgages will rise from 4.25 per cent to 4.75 per cent.
The bank said clients with Bermuda dollar loans will receive letter notices specifically detailing the change applicable to their loan.
In certain cases, Clarien said, the regular scheduled loan payment will increase to ensure that the loan is repaid by the scheduled maturity date.
Internet banking clients are being notified and further information is available from the service centre (firstname.lastname@example.org).
The bank has recently updated and increased term deposit rates and frequently reviews rates to ensure loan and deposit products are competitive.
The hike of 50-basis points in the US federal funds rate earlier this month led to near immediate action from Butterfield, which raised its interest rates on loans and selected deposits.
The base rate for Bermuda dollar residential mortgages, consumer loans, corporate loans and US dollar loans will increase by 0.50 per cent.
Butterfield’s rate increase on loans is in effect, while their change for Bermuda residential mortgages will take effect on August 5.
Selected deposit rates at Butterfield with terms of 90 days or more will be increased in line with market rates.
The federal funds rate is the central interest rate in the US financial market. It influences the rate banks charge their customers with higher credit ratings (prime rate) and also longer-term interest rates such as mortgages, loans, and savings.
The Fed is expected to consider further rate increases in the future.