Capital G Bank has hit back at Bank of Bermuda's efforts to lure customers away from its rivals by offering advice on moving mortgages and cutting rates to 6.5 percent by warning this could be a short term gain.

In a press release on Friday Capital G Bank, the Island's newest bank, pointed out that all mortgages in Bermuda were flexible, not fixed term and subject to rate changes at the discretion of the lender.

“While one financial institution can have better rates on any given day, the situation is dynamic and another could offer a better rate tomorrow,” said the statement. “Anyone considering incurring the cost of moving a mortgage from one bank to another should be aware of this very important fact.”

Capital G Bank, however, declined to reveal its own mortgage or loan rates, but said that it had competitive rates compared to other lending institutions.

Bank of Bermuda on Tuesday sparked what could become a price war by lowering its base rates on all loans by 0.5 percent to 6.5 percent and waiving service charges for May, June and July.

It claimed that it was offering the lowest rates for loans on the Island after the move, but this claim was contradicted by Bank of Butterfield who said that they already offered mortgages at 6.5 percent interest or lower.

When asked if the move of lowering rates plus and aggressive advertising campaign might spark a price war, Philip Butterfield, the new chief executive officer of Bank of Bermuda, said that if it did it would be good for the consumer.

On Thursday, the Bank of Butterfield said it already offered similar rates to those the Bank of Bermuda is now offering.

Capital G Bank on Friday hit back as well and to draw attention to its customers and potential customers about its services.

“In light of recent loan interest rate adjustments in the Bermuda market, I am pleased to advise that Capital G Bank will continue to offer competitive, yet personalised lending products,” said the bank.

“While interest rates are, and should be, a very important consideration for anyone requiring a mortgage or loan, it is important to note that the majority of mortgages in Bermuda have variable interest rates.

“The rate that is quoted when borrowing money from a bank or deposit company can be increased at any time at the Bank's discretion and with minimal notice.”

The bank said that in its experience the average Bermudian in the current market requires a 30-year mortgage and not a 20-year mortgage.

“This is an area in which we are particularly competitive,” said the bank. “Capital G Bank is committed to providing competitive rates on both sides of the balance sheet, offering a banking package that meets the needs of borrowers and depositors.”

And it went on to say that one of the most important variables when selecting a financial institution is trust.

“The borrower should have the confidence that the bank will provide the individual attention that is needed to meet his or her financial goals,” said the bank, which has prided itself on being a small community bank.

“The borrower requires an experienced lender that has a track record of working with customers during times of increasing or decreasing rates to ensure that they get the best possible deal based on their individual circumstances,” it added.

It went on to say that the lending team at the bank was 100 percent Bermudian and had extensive experience lending in Bermuda to Bermudians and is “committed to helping customers find the best lending solution”.

The bank's standard financing term is 75 percent against the value of the asset securing the indebtedness for up to 30 years.

But it said that it will work with clients to find creative solutions based on the individual circumstance which can lead to increased financing.

And in response to Bank of Bermuda offering a 48-hour loan approval service, it said: “Capital G Bank has built its reputation on providing superior customer service.

“Historical response and approval time on a completed application form, inclusive of all relevant supporting documentation is 48 hours, as published in our promotional literature, specifically the Loans & Mortgages brochure.”

And the bank said that it recognised that the loan process was different for everyone.

“Our financial solutions will always be tailored to the needs of individual customer as we endeavour to provide highly personalised services,” it said. “Our loan representatives are pleased to sit down with customers and discuss each customer's unique needs.”