Interest rate cut not passed on in full

HSBC Malta has just made banking history. For the first time ever a Maltese bank is failing to pass on to home loan borrowers the full interest rate reduction recently announced by the Central Bank. In fact, HSBC is cutting the home loan rate by just 0.40 per cent when the reduction announced by the European Central Bank last week was of 0.50 per cent.

This means that the bank has unashamedly decreed that all home loan borrowers fork out an extra 0.10 per cent in interest on their house loans. As an example, a young couple who have taken up a house loan of €50,000 will be paying an additional €50 interest each year for the duration of the loan. Since home loan terms are in the region of 30 to 40 years this adds up to an extra €750 to €1,000. This sum is over and above the already burdensome monthly repayments running into hundreds of euros per month. While this may not sound a lot to some, I fear that this is just a precedent. It is just "testing the waters". Should there be no public outcry I fear that home loan borrowers will be fleeced further of an ever-increasing chunk of their hard-earned money in months and years to come.

HSBC Malta is truly a global bank. In fact, this is exactly what it does in the UK and probably elsewhere too!