HDFC, ICICI Bank hikes home loan rates

Friday, August 1, 2008 at 4:08 am

HDFC Ltd and ICICI Bank, two of the largest housing finance providers in the country, on Thursday (July 31) hiked their floating home loan rates by 0.75%, a move that would increase the overall repayment by an estimated over 12%.

ICICI Bank, the country’s biggest private sector lender, also increased the interest rate for retail fixed deposits by 0.75-1.00%, with effect from tomorrow (August 1). Besides, it announced an increase of 0.75% in its floating reference rate for consumer loans, including for housing, with effect from today.

Separately, HDFC said it has revised its retail prime lending rate on which adjustable rate home loans are benchmarked by 0.75%, effective from tomorrow (August 1). Following this hike, the floating rate home loans would be priced at a minimum of 11.75% for new HDFC customers, while fixed rate would remain unchanged at 14%.

ICICI Bank said that the revised floating reference rate for its consumer loans would increase to 14.25%, from 13.5% presently. The fixed rate loans would not be impacted for ICICI Bank customers as well.

ICICI Bank also announced a hike of 0.75% in its benchmark advance rate, which would now increase to 17.25% from 16.5% currently. The hike entails that consumers would have to now fork out over Rs 1,000 more every month as EMI for a loan of Rs 20 lakh, whose repayment is spread over 20 years.

A few banks already announced rate hikes yesterday and others are expected to soon follow suit. On a 11.75 per cent floating rate, the EMI is estimated to work out to around Rs 21,675 per month, up Rs 1,031 from Rs 20,644 at a rate of 11%. This would result in an overall additional burden of close to Rs 2,50,000 over the 20-year period.

The rates are being revised in the wake of tight monetary measures announced by RBI on Tuesday, when it asked the banks to maintain higher mandatory cash reserves with it and also increased its short-term key lending rates for them.

Public sector lender Punjab National Bank on Wednesday (July 29) announced an increase of up to one per cent in the Prime Lending rate to 14%. Private sector Axis Bank also hiked its PLR by 0.5% to 15.75%, which would came into effect yesterday (July 29), while Jammu & Kashmir Bank hiked its PLR by up to 1%.

As a part of its measures to tighten liquidity in the banking system to counter inflation, the apex bank has hiked the short-term inter-bank lending rates (repo rate) and mandatory cash reserve (CRR) by 0.50% and 0.25%, respectively.

Experts believe that home loans could get costlier again in coming months as RBI is expected to further tighten its monetary policy with additional CRR and repo rate hikes. (PTI)

( This post is from an independent writer. The opinions and views expressed herein are those of the author and are not endorsed by APakistanNews.Com.)

HDFC, ICICI Bank hikes home loan rates

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