Banks adjust their rates after ECB decision
HSBC and Bank of Valletta this afternoon announced a raising of their interest rates in line with the decision by the European Central Bank to raise its reference rate to 4.25 percent.
HSBC said that as a result of the ECB changes and reflecting the current economic environment it. has adjusted its Base Rate to 4.35%. It is also introducing a Home Loan Base Rate (HMLR) which will be 4.25%. The HMLR will be the base for the bank’s variable mortgage lending.
The bank has also raised the rates on a number of its savings and deposit accounts. In some instances this rise is above the increase in the ECB rate rise to make the bank’s products more attractive and to encourage further savings, HSBC said.
Bank of Valletta said it will be raising its Base Rate to 4.25% with effect from 7th July.
BOV referred to its decision announced on the 28th December 2007 that, with effect from the 1st January 2008 and until further notice, it was adopting the ECB refinancing rate as its Base Rate and said that the increase being announced today reflected this policy.
With effect from 7th July 2008, the interest rates on euro denominated savings and term deposit accounts will increase by 0.25% p.a. Similarly, debit interest rates on loans and overdrafts, as well as on credit cards will be revised upwards by 0.25% p.a. with effect from the same date.
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M.Vella
Jul 6th 2008, 00:37
Mr Martinelli,
The issue is not if you find 'Fixed rate Mortgage rates' on Wikipedia, the issue is a Fixed rate Mortgage available locally from any bank off the shelve. I do not know of one single home-owner enjoying such a loan facility. One person I know who did inquire on a fixed rate loan was quoted a significant margin and a painfully short term.
I agree with you that, for example, the increase in the cost of crude oil is not of Government's making. The fact that Malta is 100% or thereabouts oil dependent with signinficant inefficiences that significantly augment our need for oil is indeed a Government issue and one that Government has perfomrd very poorly to the detriment of a middle class now under siege.
Andrew Martinelli
Jul 5th 2008, 02:14
@ Mr. Alex Ellul
Point taken, just glancing at the balance sheets of the companies in our duopoly banking system it is quite clear that, YES, they do have a lot of liquid!
@ Mr. Arthur Ellul,
Whilst I am still not a home-owner, or home-loan-owner, I pretty much understand the workings of a commercial bank loan, be it in the form of credit cards, commercial loans or home loans.
What I don't understand is why people like you have to bring in the Government EVERY time. I don't sing their (the politicians) praises, but neither do I blame them for every single mishap (or at least that is how you view it...) that happens to occur in our everyday lives.
By the way, I suggest you look up 'Fixed Rate Mortgage'; a Wikipedia definition will pop up as the first result in a Google search. You should find it easily enough, but if you don't you can blame the Government.
@ Mr. Joe Borg
I'd rather be a GonziPn lover than be someone like you: sad, frustrated and disillusioned. Grow up. Please learn how to put forward a decent argument.
arthur ellul
Jul 4th 2008, 17:22
@ Andrew Martinelli,
Banks, in general lend at X% over base rate, therefore, when the base rate flactuates, your interest rate is adjusted accordingly. In the coming days, you, and other people who enjoy facilities whether by way of a home loan, a credit card, or a consumer loan, will be notified that in line with the increase in the base rate, your monthly repayment will be increased to reflect the increase in interests rate. If you are not aware, this is because a loan is a hypotetical contract between two parties (a lender and a borrower) wherein repayments must be met when they fall due, and if a lender miscalculates the monthly repayments and a balance remains after the lapse of the lending period, that balance cannot be claimed from the borrower, since his monthly committment was met in full. have you never realised that whenever interests decreased, the monthly repayment remains unchanged, while an increase in the interest rates will quickly be reflected in the repayment.
On one hand, I do not know of any home loans which are pegged to a fixed interest rate for the whole duration of the loan, you must be very lucky indeed
Alex Ellul
Jul 4th 2008, 14:08
@Andrew Martinelli: Appreciate your agreement with my worry for the young house owners. I agree with you that the USA housing crash was due to the banks' greed and irresponsibility. However I would like you to consider what the banks in Malta are doing: They have a lot of liquid, hence they are over-loaning. Besides, part of the blame for the over-priced properties is due to the fact that the property developers are asking prices that are equal to the amount of money that the bank can loan to the client (young couples). Now that the rates have gone up, our sons and daughters have to eat less to service the loan. The other option is repossession by the banks. The two things in favour of our sons and daughters are 1. their ability to work harder and harder, but there's a limit to this, and 2. the fact that Dr. Gonzi's government has created a near zero-unemployment condition. Furthermore, the fact that we had joined the Euro zone in 1st January of this year had reduced the rate by 0.25% which was a boon for the house-loaners.
Chris Vella
Jul 4th 2008, 13:02
@ arthur ellul and all Labour supporters
it will be useless for me to go on about how the bleak economic climate is hitting hard most of the developed countries of world. You only have to watch foreign and respectable sources of news such as CNN and BBC News to get a better picture of the situation. This is not something of the PN making. It so happens that the PN is in power during this difficult period. The rise in prices of food, oil, and other commodities is being felt by everyone - you, me, and Joe Public. Had Labour been elected to power this year you would have still experienced interest rate rising, food prices rising etc. Yes, your beloved ex-Great Leader Dr. AS would have halfed your surcharge as promised but did he tell you or me if he would have rised the water and electricity rates or taxed us more through income tax to make for this. No, he did not!. The PN instead chose to increase the surcharge and you pay according to how much you use.
Andrew Martinelli
Jul 4th 2008, 10:06
@ Mr. Arthur Ellul,
Type staunch one-party supporter or "adorer" is more appropriate: people like you are so brain-washed and devoid of any reasoning that whatever happens in this country that is not to your liking is OBVIOUSLY the Government's fault.. WRONG! And please don't get me wrong, I'm against any kind of partisan politics, be they red, blue or green.
The 0.25% increase is a counter-inflationary measure: higher interest rates make people more likely to save than consume, since they gain more by saving, as long as the inflation rate does not exceed the base rate, in which case we would have negative real interest rates.
With regards to "because monthly repayments will be reviewed to reflect the increase in the interests rates": if your home loan is set at a fixed interest rate (therefore not an Adjustable Mortgage Rate featured in the US housing slump/credit crisis) then your monthly payments will not be affected.
@ Mr. Alex Ellul
Yes, God help the young house-loaner! But your economic reasoning is flawed: The USA slump was NOT caused by high interest rates, but by an irresponsible mortgage-lending sector which essentially decided risk didn't exist!
A Camilleri
Jul 4th 2008, 09:16
@ arthur ellul
yeah... maybe if we voted sant in power, we would not have all these problems in the world! We might have been living in a perfect world! We would be buying oil at 13 dollars per barrel. We would be buying cheap food from abroad. All the world's problems would have been solved...........
dream on.....
Andrew Bonnici
Jul 4th 2008, 09:07
My comment is a typical one that a bus driver tells a Russian girl....Qiiiiissssaaaa Heeeejjjjjj...but im not smiling!
joe borg
Jul 4th 2008, 08:56
Three cheers to all Gonzipn lovers!!!!!!!!!
in a few weeks' time, since election, does anybody want to place a bet (including big Austin) that Gonzipn, has lost the 1565 majority he had in Gozo...(never forget that in Malta Gonzipn is a minority party)....because of all his never-mentioned-before-elections actions!!!! The suspension/removal of Housing loans to new buyers, the ever exploding energy rates and now increases in barrowing interest rates by the CBM have all put citizns in tatters.
And what a cheek.....Gonzipn asks for pairing in Parliament....Pairing my foot!!!!
Does anybody recall Fenechadamipn in opposition???? Has he ever lent a helping hand???
Have they ever put Malta' interests before theirs and their families'??? Are we not living in a segregated nation, where the blues have for the last 20 years or so, sidelined all those who do not share their beliefs. So let it be, then..........
Daniel Bonello
Jul 4th 2008, 08:54
I agree with Mr Alex Ellul when he says that such decisions are eating up our disposable income, requiring us to make some belt tightening.
On the otherhand, although I do not rate myself as to remotely being an economist, I interpret the ECB's decision in the light of a prolonged period of a weak US$ and its direct impact on the European internal market.
In the last months, countries have been using their dollar reserves to buy American products (or at least those price-tagged with a $ sign) since these resulted to be cheaper in comparason with European products on the international market. i trust that this resulted in a slow-down of the European economy
I suspect that the ECB move is to slightly devalue the Euro to balance it against the US$.
Once again ... I do not have the economic credentials to understand and foresee the ECB's line of thought, but again I find it tough to digest that the value of my money is being constantly nibbled because of developing international trends. Will this lead us to a breaking point situation?
Kenneth Pisani
Jul 4th 2008, 08:07
Well according to the wise Mr.ellul if we had voted Dr.Sant for primeminister we won't be having these problems today.Please grow up and maybe watch some foreign news instead of only super one!!!
Alex Ellul
Jul 4th 2008, 00:53
Food up, oil up, bank rates up. God help the young house-loaners. The ECB must be stark-raving mad to increase the basic bank rate in this situation. Do they want to see a repeat of what's happened in the USA happening in Europe?
arthur ellul
Jul 3rd 2008, 21:23
how's that for economic growth.
with surchange being levied at 95%, now an increase in consumer lending and home loans by a further .25% will continue eroding spending power from our pockets. Why? because monthly repayments will be reviewed to reflect the increase in the interests rates.
Hurray for all those that voted for GonziPN, par idejn sodi my foot.