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Home loan to cost more from next week

BE PREPARED to pay more on your home loan. You will know how much more by Monday or Tuesday. The top three banks offering such loans -- ICICI, HDFC and SBI -- have informally agreed to increase the rate early next week. Sources in these banks said the interest rate would be hiked between 50 and 75 basis points.

india Updated: Apr 29, 2006 15:30 IST
ARUN Kumar

BE PREPARED to pay more on your home loan. You will know how much more by Monday or Tuesday. The top three banks offering such loans -- ICICI, HDFC and SBI -- have informally agreed to increase the rate early next week. Sources in these banks said the interest rate would be hiked between 50 and 75 basis points.

This means, the home loan interest rate will be around 8.75 per cent or 9 per cent. Currently, these banks are charging 8.25 to 8.5 per -- depending on the size and tenor of the loan.

Sources in ICICI said a decision on the hike might be taken in Saturday's board meeting.The bank has advised its agents to clear pending loan applications before April 30 in preparation for a possible rate rise.

Sources in HDFC said a hike in interest rate was inevitable as the cost of funds had increased significantly. HDFC is likely to increase the rate either on May 1 or 2. SBI chairman A.K. Purwar had earlier this week said the market conditions warranted an increase of 25-50 basis points on home loans.

Earlier this month, the Reserve Bank of India had increased the banks' risk weightage for exposure to real estate to 150 per cent from 125 per cent and tightened provisioning norms on personal loans.