Following the market trend and buckling under rising cost of funds, ICICI Bank, the biggest player in the home loan segment, has increased the interest rate by 50 basis points on floating loan. Now, the floating rate of interest would be between 8 per cent to 8.5 per cent.
The interest rate hike would either increase the repayment period or the out go through the equated monthly installments.
An increase of 50 basis points or 0.5 per cent in the interest rate would enhance the repayment period by 24 months on a 20-year loan.
This means, the 20-year loan will become 22-year loan. In the case of 15-year loan, the repayment period will increase by 12 months and in case of 10 years it would increase by five months.
In case the consumer wants to cap the repayment period, then the EMIs for Rs 1 lakh loan of 20 year maturity will increase by around Rs 32. In case of 15 years loan, the EMI will go up by Rs 39.
Commenting on the impact of the interest rate hike, ICICI Home Finance chief Rajiv Sabraval said that even after the current hike, the interest rate scenario is similar to 2003 when the market has increased by more than 30 per cent.
{{/usCountry}}Commenting on the impact of the interest rate hike, ICICI Home Finance chief Rajiv Sabraval said that even after the current hike, the interest rate scenario is similar to 2003 when the market has increased by more than 30 per cent.
{{/usCountry}}After the RBI increase in the repo rate, all the leading banks, including HDFC Ltd, LIC Home Finance and other public sector banks have increased the home loan rate by around 50 basis points.