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Habib Bank AG Zurich | BASE RATE |
Q 01: We came to know that Habib Bank AG Zurich, UAE (HBZ-UAE) is increasing rates for its customers, is that true?
Yes. For the first time in more than 8 years, Habib Bank AG Zurich, UAE has decided to revise its Base Rates (for credit facilities linked to Base Rate or Consumer Base Rate) to reflect the current economic climate. For more details please contact your Relationship Manager.
Q 02: Has the increase in interest rate linked to the introduction of VAT?
No, this has nothing to do with the introduction of VAT. Please note that VAT is not applicable on interest payments.
Q 03: What is the Base Rate?
The Base Rate is defined as the interest rate at which a bank lends to its Customers. Base Rates are updated at a predetermined frequency based on many factors e.g. cost of funding, inflation, market performance, etc.
Q 04: What change has the HBZ-UAE made in the Base Rate?
HBZ-UAE has increased the Base Rate from 9.5% to 10.25%.
Q 05: What type of customers will be impacted with this Base Rate change?
The Base Rate change will impact all customers having credit facilities linked to the Base Rate. If your offer letter mentions Base Rate or Consumer Base Rate in the pricing this change will impact you.
Q 06: What type of customers will not be impacted with this change?
All Fixed Rate financing facilities will not have any impact of this revision. Therefore the customers availing Credit Cards, Auto Loans, Personal Loans etc. will not be affected.
Q 07: Has there been any other changes made to my loan terms and conditions?
No, your loan terms and conditions remain the same.
Q 08: Is the Base Rate revision applicable to existing and new consumer loan?
Yes, it is applicable to existing and new loan/financing customers.
Q 09: Is the Base Rate revision impact the return on Saving and Deposit accounts as well?
No, this change will not have any impact on return on Saving and Deposit accounts.
Q 10: How are you going to communicate the Base Rate increase to customers?
The Base Rate change has been communicated to customers through publications in the English and Arabic newspapers (Khaleej Times and Al Bayan). Our website has details of this change under the announcements section. In addition, customers have been sent letters as well.
Q 11: Why has HBZ-UAE published these rates in newspaper?
HBZ believes in transparent communication with its customers. As such any rate increases or decreases need to be communicated in advance. This is also part of the terms and conditions signed between the customer and HBZ. Therefore HBZ has published the new Base Rate in the newspapers.
Q 12: What other communication method will be adopted HBZ-UAE to communicate the same to the Customers?
The same will be communicated to Customers using the following channels:
- Newspaper advertisement
- Call center (Dial in customers)
- Branches (Customer calls or walk-ins)
- Letters
Q 13: Why are these rates going up?
Globally interest rates were constant for a number of years, therefore for the last 8 years HBZ did not change the Base Rate. Since 2016 the interest rates have been increasing due to economic conditions including inflation. The increase in the global markets and the UAE rates has been in excess of 1%, therefore we have to align our Base Rate accordingly.
Q 14: What type of facilities will be impact with this change in Base Rate?
All financing facilities linked to Base Rate or Consumer Base Rate will be impacted with this increase. Namely those facilities are :
- Commercial Loans & Advances
- Commercial Mortgage Loans
- Residential Mortgage Loans
- Overdrafts
- Export related facilities
- Import related facilities
- Local Bill Discounting
- Lombard Lending
- Rental Loans
Q 15: How will this effect my mortgage, as it has a Fixed Rate for first 2 years?
You rate will not change during your first 2 years as detailed in your offer letter. Afterwards your mortgage will be charged interest as per the Base Rate.
Q 16: I pay my periodic loans payments by Direct Debit; do I need to do anything?
No, we will ensure your correct periodic payments are taken from your nominated Bank Account. Any changes will be communicated to you through our Call Centre or the Branch.
Q 17: Will this impact my existing approved facilities, not yet disbursed?
Yes, from the implementation dates (1st of Feb, 2017 or 1st Mar, 2017) all new disbursements of facilities will be done using the revised Base Rate, depending on whether it’s an individual loan or a company loan.
Q 18: When will the Base Rate increase will be implemented?
The Base Rate change will be implemented in 2 phases based on type of customers, as per below timelines :
- Corporate Customers: 01 February 2018
- Individual Customers: 01 March 2018
Q 19: My Auto Loan repayments will also change with this Base Rate revision?
No, Auto Loan is a Fixed Rate product and will have no impact due to Base Rate change.
Q 20: Will Base Rate increase impact my/our periodic installment?
No, The Base Rate change will not impact your regular monthly installment, it will increase your payable balance, which you can pay on renewal of facilities or last installment, whichever comes first. For more information please contact your Relationship Manager.
Q 21: The interest rates have changed but my payments have not – why?
To help you manage your cash flow HBZ-UAE will collect the amounts related to the increase in interest along with the last installment or upon renewal of facilities, whichever comes first. Post renewal of facilities all your future installments will be revised to reflect the increase in Base Rate.
Q 22: What if I don’t want to balloon/accumulate my unpaid interest due to increase in the Base Rate?
This will require change in your installment amount, please contact your Relationship Manager or Branch.
Q 23: If I have further enquiries on revised Base Rate whom should I contact?
You may contact your Relationship Manager, alternatively you can visit your respective Branch.
Q 24: When is the next Base Rate change likely?
The Bank revises the Base Rate on a periodic basis to reflect the prevailing economic environment. In case of any further changes you will be notified.
Q 25: I do not agree with the increase in the interest rate – what do I do next?
The increase in interest rate is very modest and the bank operates in the same eco-system as you where we have seen an increase in the cost of doing Business. While the decision has been made to increase, we are open to understand your concerns in more details and request if you can contact your dedicated Relationship Manager or contact your Branch for a more detailed discussion.