High street banks expected to cut interest rates
(CNS): Butterfield Bank (Cayman) Limited is the first of Cayman’s high street retail banks to announce an interest rate cut following the reduction in the US Federal Funds Rate yesterday by a quarter point. Butterfield said it will cut its Prime Rate for US and CI dollar lending for residential mortgages, consumer loans and corporate loans by 0.25% to 7.50% effective 20 December. While Butterfield is the first to publicly announce the cut, the other banks are expected to follow suit.
The US rate cut triggered a share price slump after the third interest rate cut in a row due to projections of a slower pace of cuts next year. Reports indicate that the number of jobs being created is greater than expected, but rises have continued. Federal Reserve chairman Jerome Powell warned the situation would likely result in fewer rate cuts than expected next year.
“We are in a new phase of the process,” he said at a press conference. “From this point forward, it’s appropriate to move cautiously and look for progress on inflation.”
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Category: Banking & money, Business
Please advise where the high street is. I walked down Cardinal Avenue but could not see one. When I lived here before we had Barclays, Scotia and RBC .
Isn’t that lovely of the banks to help us out before Christmas? They always have our best interests at heart. I particularly enjoy:
losing 4 cents somewhere between my US$ and KYD$ accounts and deposits, can someone explain to me how the banks are allowed take the 4 cents from me? What law is this based on? Why? And who gets the 4 cents?
even better is being charged to withdraw my own US$ cash, i love paying the bank to give me back my money.
I also smile when they halt my account because for some reason they decide that my KYC documents (CUC Bill) have not been updated sufficiently (since last year)..that’s always nice to be at the fosters checkout and have my debit card declined infront of everyone
even better is when i go to borrow money to buy a house and the bank just magically make it appear! From absolutely nowhere, they just create this magic money, charge themselves nothing, and charge me completely made up interest rates on top of US interest rates, for no reason at all apart from their own.
or what about when you go to deposit cash and they – ha ha – the refuse to accept it! that’s so funny, especially when you remember that they are a bank, gosh i do get so confused sometimes, i thought a bank was there to accept cash
and how can i forget the fact they charge me to send money between my own accounts, or to pay into accounts in their bank, or to pay bills at other local banks. Its only right i guess, how else could they afford to keep those massive bank offices so pristine?
finally, i should share the joy i feel whenever i ask them what would happen if everyone turned up today to withdraw all their own money…..the look on the bank tellers face when they realize the entire banking system is a giant ponzi and that not one of your banks has your money at all…if everyone goes to any retail banking center in Cayman today and asks to withdraw even 20% of your own money, the banks will immediately close and have us all leave
the biggest scam of all time, and they charge you for it!
merry festivus y’all
It is odd that we allow this
Don’t forget they even congratulate themselves with the local banking awards, and then use it in their promotional material.
Absolutely terrible companies.
Amen. And you definitely bank with butterf^@#. They are the epitome of legalized criminality with their fees and incompetency. I said the same thing about trying to get my cash when they said they couldn’t give me that much. Told her to speak louder so those in the back of the room could hear. Just imagine the giant sucking sound when it comes to light their books aren’t fully backed by liquid funds…. Talk about a rush…. One day…. I will bring the popcorn – got out of their racket a while ago, unscathed and mourning for those who will feel it in the future…
…neo-banks will be their undoing…
So, does this mean Butterfield in Cayman has now deigned to now charge Caymanians the same interest rates Butterfield Bermuda charged Bermudans since September? What am I missing? Is there a disparity? Why?
Why does the photo have to include the Pirate?
Me thinks you jest… Rather fitting, no?
Can a more educated person explain to me why we use the Prime rate instead of the fed funds rate which is significantly lower than the Prime? And also why the banks add +2 on top of the prime. Still very high for cayman.
Could someone please confirm whether Butterfield charges the same rates to customers in Bermuda, as it does in Cayman?
The justification is that it costs the Cayman banks to borrow money at Fedrate and so they get to lend that on at a higher rate to make their cut.
You really expect to borrow at the interbank rate? 🤣 Likewise, the +1 is an understandable risk premium given Cayman is obviously not the US. Could be much worse.
I believe the +2 only applies to non-Caymanians, but as a Caymanian and one who has never had to borrow money I’ll defer to you.
One would assume the extra point on expat borrowing is due to perceived increased risk, as a local is less likely to default or flee the jurisdiction. Probably doesn’t help that average expat borrowing is surely higher in terms of principal, hence another increased risk.
In simple terms – because they can.
Cabal.
The US Fed Funds rate is the rate large banks in the US lend overnight to other large US banks, or place deposits with a US Federal Reserve bank (a simplified explanation). It is not a retail rate available to customers.
The US Prime Rate is a benchmark rate that US banks lend to very high credit quality corporations and individuals (with virtually no credit risk). It is set at approximately 3% above the Fed Funds Rate, and is adjusted the day after the Fed Funds Rate changes. (A bank is not going to lend at the Fed Funds Rate)
As mentioned above, the Prime Rate is the rate offered to borrowers with little credit risk. For most borrowers, a spread is added to the Prime Rate depending on credit quality of the borrower (not everyone that borrows money is going to pay it back so the bank compensates for that by adding a spread).
Some spread wider than others…. Open wide I forgot the Vaseline….
Not saying I am more educated, so I may be wrong here but this is how I understand it.
The Fed fund rate is effectively what banks will lend to each other at, while prime rate is what the banks will lend to customers. Cayman mortgages are a bit riskier than US, so they charge us over prime (i.e. prime +1, or+2). Not that I agree with it.
If I am wrong, someone please correct me.
Because the banks have a mandate to rip off Caribbean peoples.
Join the credit union if you can. Much more consumer and depositor friendly policies and lower interest rates.
Because in the Cayman islands the public accepts anything and everything. Even $6.00 gasoline when the oil price has fallen $20 a barrel in the last 3 months.
So the bank makes more money, dummy.
Cayman banks are a cartel and can do what they want. CIMA just let ok on and so nothing.
The Fed Rate is the rate a Bank would borrow short term loans from another Federal Reserve Bank. Prime Rate is the rate Banks set to lend to their No risk customers. Banks add a margin to the Prime Rate for loans to customers they perceive to have business risks.
Because fed funds rate is for risk free money. Lending money to you is not risk free so the rate is higher.