ICICI Bank hikes home, personal loans
ICICI Bank has hiked its home and personal loan rates by over one per cent on Tuesday, report BSS Reddy & MC Vaijayanthi.Updated: Feb 07, 2007, 00:26 IST
Barely a day after the Union Finance Minister had asked the PSU banks to restrain from hiking the home loan rates, the private sector ICICI Bank has hiked its home and personal loan rates by over one per cent on Tuesday.
ICICI Bank hiked its overall benchmark lending rates to 14.75 per cent while floating rate loans jumped to 11.75 per cent from the earlier 10.75 per cent. The hikes come into force from February 9.
The existing home loan customers are likely to feel heat from the respective reset date coming in a month or two, while the existing fixed rate customers will not get impacted by the change in the rates, the bank said in a release.
However, the bank also tweaked its deposit rates for over 5-years tenure falling under tax rebate by 1.25 per cent to 9.5 per cent.
The hike is likely to extend loan repayment period of a 15-year home loan by about 2 years at the existing EMI, according to analysts. With this hike, the borrowers of the bank who have taken (long-term) home loan about a couple of years back will see their future interest component shooting up.
The move may boost the defaults in the bank, which is already saddled with higher personal loans going bad than several public sector banks.
In the recent meeting FM had raised the issue of social impact on the borrowers, with the bankers. "The interest burden in EMIs of those who have taken loans at low rates was already up 25 per cent. Above this level the borrower will not be in a position to adjust his finances," is the argument the FM had put forward according to another top PSU banker.
PSU banks are not in a mood to hike their personal loan rates for now. "PSU banks are not looking at hiking the loan rates. After credit policy there was a feeling that loan rate hike may be necessary only if deposit rates are hiked steeply," said MV Nair, CMD of Union Bank.
Indian Bank CMD KC Chakrabarthy said that the bank, which raised lending rates by 0.25 per cent from February 1, may not have to raise rates again. The bank also enjoys a cushion of deposits raised from semi-urban and rural areas.
Housing Development Finance Corporation (HDFC), ED, Renu Sud Karnad said that the housing finance company was not increasing its mortgage rates for now.