Home loan rates on the rise
HDFC has hiked its prime lending rate from 10.75 per cent to 11.25 per cent and more banks are following suit.india Updated: Feb 01, 2006 13:41 IST
Premier housing finance company HDFC on Wednesday set the tone for hiking home loans in the country by upwardly revising its rates by 50 basis points across all maturity including floating rates.
HDFC has hiked its prime lending rate from 10.75 per cent to 11.25 per cent. This follows a similar upward revision in both fixed and floating home loans, a HDFC spokesperson said.
While fixed rate has been changed from 8.75 per cent to 9.25 per cent, the floating rate has been changed from 7.50 per cent to 8.
The interest rates on a Rs 10-lakh plus loan for a tenure of 15 years will go up from 7.5 per cent to 8 per cent in the case of floating rate and from 8.75 per cent to 9.25 per cent for fixed rates. "The new rates will be applicable for fresh loans. Rates for old floating loans will also rise," said an HDFC official.
The upward revision was necessitated because of a hike in deposit rates by 25 to 50 basis points.
HDFC being a premier housing finance company, it has set the trend for other housing finance companies to hike their rates.
Immediately after the HDFC hike, the State Bank of India too reportedly hiked its home loans by a similar 50 basis points.
According to a Canfins official, considering the market trend they to will have to go for a hike but that may not happen in this financial year. He said, lot would depend on how SBI and ICICI are going. As of now, the interest rates for a tenure of 5 years in Canfins is 7.5 per cent, for 10 years it is 8 per cent and for up to 20 years it 8.25 per cent.
ICICI Banksaid it would decide on whether or not to increase home loan rates, after watching the impact on cost of funds.
"We are watching the impact on cost of funds and decide subsequently whether or not to increase interest rates on home loans," a bank official said.
With the increase of repo and reverse repo rates by 25 basis points by RBI in its third-quarter review of the monetary policy, banks are all now poised to increase retail lending rates.
First Published: Feb 01, 2006 11:50 IST