HSBC lowers most lending rates by 55 points

HSBC is reducing its base rate for all lending rates, except on home loans, to three per cent from 3.55 per cent following the European Central Bank's decision to lower its reference rate.

The home loans base rate, the base for the bank's variable mortgage lending, is being decreased to 2.75 per cent from 3.35 per cent.

However, a number of HSBC's core saving rates will remain unchanged in spite of the reduction in the ECB's intervention rate to encourage savings.

The bank said this should encourage savings and would help ensure that the funding base for banks in Malta remained strong in spite of the low interest rate environment.

The bank said that it was continuing to balance both the requirements of its saving and borrowing customers.

Interest rates would continue to be closely monitored and would be adjusted in the light of market conditions including possible further ECB rate reductions, the cost of wholesale funds and HSBC's assessment of credit risk in line with Malta's economic performance.

The bank has retained its higher rate on the online savings account at three per cent per annum rate for balances over €5,000, in line with its drive to encourage use of electronic banking and automated channels. Term deposit rates for two, three, four and five years were reduced by less than the reduction in ECB interest rates to 2.5 per cent.

The ECB recently slashed rates by 75 basis points to 2.5 per cent. The Governor of the Central Bank Michael Bonello and Finance Minister Tonio Fenech last week both said they expected local banks to pass on the full benefit of the rate cuts to consumers.