Clarien Bank is to increase its personal base lending rate to 3.75 per cent, up by 0.25 of a percentage point.

The rate hike will bring it in line with Butterfield Bank’s rate, while HSBC Bermuda’s rate currently stands at 3.5 per cent.

Customers with mortgages and loans will be impacted by the change.

The rate increase is the result of the US Federal Reserve’s decision in December to increase base rates by a quarter point, and also ongoing changes to operating costs at the bank, according to a statement issued by Clarien.

The bank is increasing its Bermudian dollar commercial base lending rate to 4 per cent, up half a percentage point.

Clarien said it will work with customers to minimise impacts on their cash flow and revise payment terms if necessary.

“Given the protracted period of low interest rates and so as to provide our clients with as much advance notice as possible, this increase will be effective June 21, 2016,” the bank said in a statement.

“In the vast majority of cases and in order to minimise the cash flow impact on our clients, the monthly loan payments will remain as previously agreed with the bank.

“In more complex cases where clients are either currently on interest only payments or in a past due status, we will work with them individually to revise the monthly payment terms and duration of their loan with the bank.”

As an example of how a 0.25 percentage point change could impact repayments, monthly repayments on a new home mortgage of $500,000 at 6.5 per cent over 25 years total about $3,376 a month, at 6.75 per cent the repayment would be about $78.50 more a month at around $3,454.

Clarien’s statement said: “We appreciate that this may cause some concern for our clients, particularly in a difficult economic environment, and therefore encourage our clients to contact their lender to discuss the changes to the terms of their loan in more detail.

“Clarien remains committed to the Bermuda community and its clients. We continue to work with all of our clients on a regular basis to understand their current financial position however the bank must take action as a result in changes to its operating and competitive environment.”

Clarien stated it continually reviews its deposit rates to ensure that it offers creative and competitive savings products for clients.