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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?
In line with the prevailing interest rate climate HBZ-UAE has decided to increase the rates for HBZ Prime Rate and HBZ Lending Rate linked facilities. For more details please contact your relationship manager.
Q 02) Has the increase in interest rate linked to the introduction of VAT? Or the recent Central Bank directive on 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. HBZ has two base rates namely HBZ Prime Rate (HBZPR) and HBZ Lending Rate (HBZLR).
Q 04) What change has the HBZ-UAE made in the base rates, i.e. HBZPR and HBZLR?
HBZ-UAE has increased both HBZPR and HBZLR 4.5% to 5.0% effective 1st of November 2018.
Q 05) What type of customers will be impacted with this increase?
The increase will impact all customers having credit facilities linked to either HBZPR or HBZLR.
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) Will the Base Rate revision impact the return on saving and deposit accounts as well?
No, this change will not have any impact on the return on saving and deposit accounts.
Q 10) How are you going to communicate the base rate increase to Customers?
The Base Rate change (HBZPR, HBZLR) 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?
Since 2015 the interest rates have increased 7 times due to economic conditions including inflation. The increase in the global markets and the UAE rates has been almost 2%, therefore we have to align our Base Rates accordingly.
Q 14) What type of facilities will be impact with this change in base rate?
All financing facilities linked to HBZPR or HBZLR will be impacted with this increase. Namely those facilities are :
- i. 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 Nov, 2018) 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 rate change will be implemented?
The Rate change will be implemented as of 1st of November, 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 rate increase impact my / our periodic installment?
No, The 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 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 Rates (HBZPR/HBZLR) 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.