Banks ‘disappoint’ in refusal to delay rate hike
(CNS): Premier Wayne Panton is disappointed that the local high street banks have refused to delay implementing the latest interest rate hike, even though there is no need for them to keep pace with the US Federal Reserve. Interest rates have increased in the Cayman Islands ten times in just over a year, adding to the cost of living crisis that people are enduring.
In a statement about the situation issued Friday, Pantonwho is the minister of finance, said he had met with and written to the Cayman Islands Bankers Association (CIBA) twice over the past year to ask the local retail banks to hold off rolling out interest rate hikes to help homeowners and businesses. However, on both occasions, with the exception of one bank, they refused.
“Given this refusal, I would like to publicly register both my disappointment in their position to date and also my expectation that they will engage in further dialogue with government to determine how best to alleviate the impact of future rate increases,” Panton said in the statement.
Larger economies use interest rate hikes to control inflation, but increasing rates here has little effect on local prices because the rising cost of living is not driven by the local economy but by the jurisdiction’s dependence on imports and the sale of property to foreign investors and absentee owners.
“While local banks have historically immediately increased interest rates in tandem with rate hikes by the US Federal Reserve, which sets the “prime” or “base” interest rate for borrowing, there is no reason why this must be the case,” Panton said. “Indeed, banks in our fellow British Overseas Territory of Bermuda do not automatically increase their prime rate in tandem with US Federal Reserve increases.”
Concerned that the banks’ refusal to help mitigate the economic forces that Cayman has little control over, Panton said he hoped they would reconsider their position. He said he wants to see a 60-day delay on rolling out hikes when they happen and for the high street banks to re-examine the policy of automatically putting up interest rates as soon as the US Prime Rate goes up.
“Although my efforts in this respect have not yet met with success, I would like to assure the Caymanian public that the campaign does not end here,” the premier said. “The banks are insisting that their residential mortgage portfolios are not ‘degrading’; however, my colleagues and I are continually hearing from constituents that their mortgage payments have increased to an unsustainable degree, in some cases up to $1,000 or more per month. This is a huge increase that might negatively impact any family in these times.”
Worried that people could begin losing their homes, Panton said the Cayman Islands Government must guard against that, and Cabinet was considering other measures to help people get through this inflationary period. He said the CIG would endeavour to find other ways to alleviate the stress that the rising cost of living is creating. But in the absence of cooperation from the banks, he encouraged borrowers to investigate fixed-rate mortgage options and to maintain lines of communication with their lending institutions.
“There is hope on the horizon, as most economists predict that the current trend of increasing interest rates is nearing its peak, and rates should start falling soon,” he said. “Government recognises our responsibility to make every effort we can to mitigate the current cost of living crisis that is negatively impacting thousands of hard-working, diligent Caymanians.”
Earlier today, McKeeva Bush MP called into Radio Cayman’s For the Record to reveal that he had filed a private member’s motion asking the government to do something to stop the banks from increasing rates and to create a local financial institution that could control the rate that banks can charge on borrowing. The motion is expected to be debated when parliament resumes next month.
See Panton’s statement and his letter to CIBA in the CNS Library and below:
- Fascinated
- Happy
- Sad
- Angry
- Bored
- Afraid
Category: Banking & money, Business
owners of businesses in Cayman have raised their prices even though prices have dropped in the US. what is the government doing to control these monopolies. this is where the government should focus on controls
Consumer protection legislation is desperately needed.
My mortgage went from 2k to 3.3k. Wild 🙂
is your rate fixed?
In other news:
The Conservative government is reportedly mulling the introduction of price controls in a bid to achieve Prime Minister Rishi Sunak’s pledge to get inflation down below five per cent.
Producers are refusing to cut their profit margins, noting that “they seem to be hiking their costs more than they need to, using the general high inflation to disguise this.”
The UK imports 40 per cent of its food. You don’t want to end up with a situation where suppliers and retailers decide to sell their produce elsewhere, because they can make more money doing so.
From 1970 to 1974 Tory PM introduced a freeze on both prices and wages, along with rents and share dividends, in 1972 — a year before the last major energy crisis.
Question for the lawyers out there. I run a tiny business and my greedy bank drain both my business and personal accounts of well over $1,000 pa and are impossible to communicate with (never respond). Is there anything stopping me from closing my Cayman accounts and instead opening accounts with a reputable Internet bank, where I can easily communicate and do anything at very minimal cost? Do I have to bank in Cayman?
No
A friend who sits on a very impactful Statutory Authority Board shared with me that “Cayman’s ideal population needs to be 130 thousand people.” For reference, we’re now around 78-85K – if they can ever get accurate census figures.
This person seemed to be repeating the official view of the Board on which he sits. Seems like there is a secret undercurrent to definitely raise our population – even more than McBeater’s target of 100K – in order to “properly fuel our economy”.
My friend compared us with another Caribbean island with a similar population. But there is one component that is seemingly forgotten when fostering population increase.
All the other jurisdictions of comparison have income taxes, which of course, are pariah here.
So exactly what are the benefits of a very much larger population for Cayman???
Our ministers want more pocket money.
The only benefit is more WP fees and they can fill all of the million dollar condos that are being billed on every inch of this rock. There is NO benefit to the community whatsoever. Traffic, trashmore, crime will all continue to rise as more and more lower income people are priced out of existence.
More WP fees, more transactional taxes on all the food and fuel they buy, more revenue for the developers and landlords. Of course, just makes the mounting problem of a rapidly increasing pool of wp homders who will eventually qualify for PR, the massive traffic problems, the spiralling cost of accommodation – but our lords and masters aren’t particularly deep thinkers and can’t see past the superficial promises of more revenue from a bigger population.