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PropGuy
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The US Federal Reserve has lowered its interest rates seven times since September 18, 2007, bringing down the cost of borrowing to just 2%.
The successive rate cuts should have sent mortgage rates tumbling in the UAE as banks benefited from cheaper funding costs. Instead banks including HSBC, Lloyds TSB and Barclays have resisted lowering their rates to below the range of 7.1% to 8.5%.
At his office in Dubai Media City, business analyst Nasir Aijaz produces a binder full of correspondence with HSBC Bank Middle East, a unit of Europe's biggest bank by market value.
His emails relate to why the bank has failed to pass on successive Fed rate cuts on the variable rate mortgage he took out - even as its own borrowing costs have been slashed.
"When I took out my mortgage, one of the best rates available was with HSBC, which was offering 7.25% if I made a down payment of 25%.
My understanding was that if the Fed rate dropped in the future, I would get a better interest rate," he says, citing the terms and conditions of the mortgage published on HSBC's own website.
It states that the bank may change its mortgage rate "based on movements in the USA Fed Funds Rate".
Despite all of his letters to the bank Aijaz has failed to get his interest rate lowered. He has attempted to contact both the UAE Central Bank and the Ministry of Economy's consumer protection unit with his grievances, but has yet to receive a response.
... The bank's refusal to lower its lending rates has provoked fury from customers who have been waiting for a reduction in their repayments since the Fed started cutting last September.
While HSBC has been hit hard by subprime losses in the US, its Middle East business is booming. The bank set aside US$3.2bn to cover bad loans in the US when it published its first-quarter earnings on May 12. It has also cut some 2000 jobs in response to declining US earnings.
That contrasts starkly with its performance in the Middle East where profits increased "across all of our customer groups and global businesses," according to its latest earnings statement.
Full article: Banks hoard Fed cuts - Banking & Finance - ArabianBusiness.com
The successive rate cuts should have sent mortgage rates tumbling in the UAE as banks benefited from cheaper funding costs. Instead banks including HSBC, Lloyds TSB and Barclays have resisted lowering their rates to below the range of 7.1% to 8.5%.
At his office in Dubai Media City, business analyst Nasir Aijaz produces a binder full of correspondence with HSBC Bank Middle East, a unit of Europe's biggest bank by market value.
His emails relate to why the bank has failed to pass on successive Fed rate cuts on the variable rate mortgage he took out - even as its own borrowing costs have been slashed.
"When I took out my mortgage, one of the best rates available was with HSBC, which was offering 7.25% if I made a down payment of 25%.
My understanding was that if the Fed rate dropped in the future, I would get a better interest rate," he says, citing the terms and conditions of the mortgage published on HSBC's own website.
It states that the bank may change its mortgage rate "based on movements in the USA Fed Funds Rate".
Despite all of his letters to the bank Aijaz has failed to get his interest rate lowered. He has attempted to contact both the UAE Central Bank and the Ministry of Economy's consumer protection unit with his grievances, but has yet to receive a response.
... The bank's refusal to lower its lending rates has provoked fury from customers who have been waiting for a reduction in their repayments since the Fed started cutting last September.
While HSBC has been hit hard by subprime losses in the US, its Middle East business is booming. The bank set aside US$3.2bn to cover bad loans in the US when it published its first-quarter earnings on May 12. It has also cut some 2000 jobs in response to declining US earnings.
That contrasts starkly with its performance in the Middle East where profits increased "across all of our customer groups and global businesses," according to its latest earnings statement.
Full article: Banks hoard Fed cuts - Banking & Finance - ArabianBusiness.com
