Local banks begin adjusting rates after Fed hike

| 22/09/2022 | 43 Comments

(CNS): Local high street banks began announcing plans to increase their own interest rates following the three-quarter percent point hike by the Federal Reserve, Wednesday. Cayman National Bank and Proven Bank (formerly Fidelity) both advised customers that their CI$ and US$ Prime Lending Rates will increase from 5.50% to 6.25% from Friday. CIBC FirstCaribbean said it will also adjust its rates to 6.25% but not until 24 October offering customers a month’s grace.

Neither Butterfield nor RBC had made an announcement regarding when their rates will increase at the time of publication.

The hike comes after Federal Reserve Chair Jerome said Wednesday that he and his fellow policymakers would “keep at” their battle to beat down inflation through interest rate increases. This is the third hike of is kind this year and comes amid a new set of projections. Forecasts also show another large hike is likely by the end of the year. Powell said that there was no ‘painless’ way to bring down inflation as he singled out the American housing market, a persistent source of rising consumer inflation, as being likely in need of a “correction.” 

The housing market in Cayman has also shown little sign of slowing down though mortgage increases for many homeowners will now further fuel their cost of living woes.

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  1. Anonymous says:

    yawn…inflation?…live within your means. problem solved.

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  2. Anonymous says:

    Thank goodness I do not have to worry about the loans/ mortgage interest hikes but I am wondering how it will positively effect my CD interest. No mortgage, no car loan no credit card! I am so glad my boss help guide me into profitable investments with our head office. . I made the suggestions to some of my friends but they were more interested in refinancing loans to upgrade, Houses, furnishings and fittings and the latest cars on the market.

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    • Anonymous says:

      The banks move the interest rates up for borrowers but do NOTHING for savers when the rates go up I’m looking at you CibcFirstcaribbean.

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      • Beaumont Zodecloun says:

        You could also be looking at nearly every financial institution except our own ever-lovin’ Credit Union.

  3. Anonymous says:

    That was expected that the Jamaican (Proven) and T&T (CNB) owned banks would be making such types of moves. Typical.

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    • Anonymous says:

      Cayman prime interest rates move in tandem with US prime rates. Nothing to do with Jamaica or TT.

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  4. Anonymous says:

    Spare a thought for those on Prime + XYZ, some folk out there could be getting close to 10% very soon.

    Meanwhile the local banks charge us to send online pmts, charge $45 to send a wire, charge to use debit cards, charge to withdraw US$, charge, charge and they all have lovely huge buildings and the top execs all live in massive homes.

    The bigger scandal is they are loaning money they don’t actually have – fractional reserve banking is causing massive problems globally and the banks are milking it. For example, if they only have to hold 10% on reserve, that means if you deposit $100, they can loan out $1000 on that money, just creating it out of thin air. It does not exist.
    Then someone borrows that $1000, puts it on deposit with same bank, who then lends it out at $10,000!!

    This is really what is going on. They are making magic money, it doesn’t exist. If everyone called up today and demanded their funds, the entire local bank system collapses by lunchtime. They DO NOT HAVE YOUR MONEY.

    And They’re not insured to cover for all the deposits.
    Why do we let the banks get away with this?

    Seriously – why?

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    • Anonymous says:

      Good Point. what’s the best way to go about this? Should we start keeping our money in our own safe at home or the likes? Should we move our money to crypto?

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      • Anonymous says:

        No, we should have banks prove they are 100% insured against all deposits and the world should remove fractional reserve banking, it is a travesty, an utter cancer on humanity. Money is the reason behind everything in life, and free unlimited money is the reason we are facing total global economic catastrophe and the FIAT banks and countries are scrambling to introduce CBDC’s and the likes. Its all ending, far quikcer than you can imagine.

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      • Anonymous says:

        You certainly must not put your money in a Jamaican Colombian or Trinidad owned bank !!

      • Anonymous says:

        Bitcoin not crypto

    • Mr. Macawber says:

      “..someone borrows that $1000, puts it on deposit with same bank, who then lends it out at $10,000”

      Why would someone borrow money to put it on deposit?

      Please elaborate?

    • Anonymous says:

      That is the same the world over.

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    • Anonymous says:

      OMG. Your third and fourth paragraphs are complete nonsense! If someone deposits $100 the bank can lend out a maximum of $100 (where would the other $900 come from??).

      What fractional reserves mean is that they take in the $100 and, say, lend out $95. The remaining $5 serves as a reserve.

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      • Anonymous says:

        Actually the original poster was on to something, this is how Fractional Reserve Money works – its a ponzi, a massive house of cards:
        When you put your money into a bank, the bank is required to keep a certain percentage, a fraction, of that money on reserve at the bank, but the bank can lend the rest out. For instance, if you deposit $100,000 at the bank and the bank has a reserve requirement of 10 percent, the bank must keep $10,000 of your money on reserve and can lend out the $90,000.

        In essence, the bank has taken $100,000 and has turned it into $190,000 by giving you a $100,000 credit on your deposits and then lending the additional $90,000 out to someone else.

        Now, if you take this out a little further, you will see that your original $100,000 can become $ by the time it is all over. Here’s how:

        – You deposit $100,000 Your bank loans someone else $90,000
        – That person deposits $90,000 Their bank loans someone else $81,000
        – That person deposits $81,000 Their bank loans someone else $72,900
        – That person deposits $72,900 Their bank loans someone else $65,610
        – That person deposits $65,610 Their bank loans someone else $59,049
        – That person deposits $59,049 Their bank loans someone else $53,144
        – That person deposits $53,144 Their bank loans someone else $47,829
        – And so on
        Ultimately, your initial $100,000 can grow into $1,000,000 with a 10 percent reserve requirement

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    • No says:

      You clearly have no idea how banking works. Of course they charge for services. And banks have always loaned out a higher amount than deposits, and that keeps lending cheaper, deposit rates higher and reduces costs for customers. It also allows the bank to absorb lending losses. On your model they would need external capital injections to do that. The idea banks need to keep lending at 100% of deposits is just nonsense.

    • Anonymous says:

      Most banks in Cayman don’t actually lend more than they have, the total loan demand in Cayman is a fraction of the collective balance sheets.

  5. Anonymous says:

    So they are lending money at 6:25 plus. What are they paying to borrow money? Oh.

  6. Anonymous says:

    Chris and Kenny got good ideas, they going fix this. Watch this space!

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  7. Anonymous says:

    Oh boy. Everything besides salary going up.

    No sigh of slowing down. Land and home ownership is slipping further away for many locals.

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    • Anonymous says:

      Yes, it’s truly heart wrenching to think these U.S. Fed Rate increases are expected to go on for a while, and will likely remain high into 2024-2025. Thus, making mortgages, land loans, credit cards, & car loans even more expensive.

  8. Anonymous says:

    Thank You, Jesus, that I only have to pay I interest on a small mortgage balance😊, but I’m still a bit worried about my 4-year, car loan.😥
    Oh man, the stresszzzzz.

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    • Anonymous says:

      Lucky You.
      You are still more fortunate that many others who are carrying large debts/credit balances on their mortgages, car loans, and credit cards.
      According to Sir Powell, in his recent public announcement, these Federal Rate hikes can expected well into 2025 or until inflation is reasonably reduced and under control. Therefore, adding to the current cost-of-living suffering.

      OPINION: I presume alot (of assets) will be sold at reduced prices once consumer goods/services become too expensive, and people gradually experience more diffuculty in servicing their debts.

      We’re ALL having to ride these waves 🙏

  9. Anonymous says:

    Oooooch!😬

  10. Anonymous says:

    Raise the rates of fixed deposits please.

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  11. Anonymous says:

    Quick Roy. Blame Wayne.

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    • Anonymous says:

      This is on Chris.

      • Anonymous says:

        @6:49pm…Really how is this on Chris? Does he control the US Fed Rates now…

        Boy, if we could just get most Caymanians some basic financial background and good old common sense, what a place this could be..

        Maybe Alden or Roy can fix this? Can you ask them how or let me know when they finished telling the U.S. Government to reduce their rates…

        Can’t fix stupid!

    • Anonymous says:

      Quick Wayne,blame Roy.

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  12. Anonymous says:

    That 6.25% fixed rate Credit Union mortgage I got 4 years ago and was a bit ‘hmmm’ about at the time is looking pretty good right about now…

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    • Anonymous says:

      Whoa! You got ripped off 4 years ago.

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      • Anonymous says:

        He/she did good. Don’t try to time the market. If it is decent, settle for that. Want to play the dice, be prepared to lose – or win. I’ll take the low return that is locked in, vs the higher return that is questionable. (Oh, I retired at age 56 with enough annual income at low rate of return to not need to worry for a modest lifestyle).

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    • Anonymous says:

      YES exactly. If you were a prudent buyer, you had the advantage to know (as EVERYONE knew) that rates were going up – No secret. So, complain that rates went up????? Where were you the past year?

      Sleeping on you’re grandmother’s couch waiting to cash your last CIG check…

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    • Anonymous says:

      Clearly you have not heard that Credit Union intends to increase the interest rates starting in October……that rate will be 7%

      OOOOOUUUCCCCCCHHHHH!

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    • Anonymous says:

      I got 5.75 now I’m laughing all the way to the bank.

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