Kolkata Community Portal || Kolkata Community Portal - News, Reviews, Comments & Discussion

Home loan rates climb higher

By Unregistered Visitors, Section News
Posted on Wed Aug 02, 2006 at 07:30:06 AM EST

HDFC, PNB, OBC Hike Interest On Housing Loans by 0.5%, SBI, BoB Expected To Follow Suit

BRICK BY BRICK

*0.5% increase in interest rates to 9.5% would raise equated monthly installment from Rs 900 to Rs 932

*Bankers feel this will constrain your borrowing ability, but won't affect demand for loans

*Floating rate for HDFC home loans will be 9.5%, while fixed rate borrowers would now to shell out 11%

*SBI hiked benchmark prime lending rates by 0.25%, but has not yet touched home loan rates

India's largest housing finance company HDFC, Punjab National Bank and Oriental Bank of Commerce raised interest rates on home loans by at least half a percentage point (0.5%) on Tuesday, while others like State bank of India and Bank of Baroda are expected to follow suit soon.

With this hike, the floating rate for home loans from HDFC will be 9.5% as against the previous 9%. The fixed rate loan borrowers would now have to shell out 11%, from 10.5% earlier.

Similarly, OBC has increased the interest rates on home loan by 0.5-1%. OBC's floating rates have increased to 9.25% and 9.75% from 8.75% for loans of less than Rs 20 lakh and above Rs 20 lakh, respectively for a repayment period up to 10 years.

Floating rates for loans with a tenure of over 10 years too have gone up from 9% to 9.5 % and 10% for loans below 20 lakh and above 20 lakh.

READ MORE Click on full story.....

The hike in the interest rates were on the card as RBI had increased short term deposits and lending rate by 25 basis points (100 basis points is equal to one percentage point) to 6% and 7% respectively in its first quarter review to the credit policy on July 25. In fact, this was the second increase by the central bank within the span of 45 days. Prior to this, RBI had increased the short term deposits and lending rates by 25 basis points on June 8, 2006.

HDFC had increased its variable home loan rates by half a percentage point to 9% in May this year along with other banks including ICICI Bank. When RBI increased its repo and reverse repo rate in June, HDFC Ltd did not increase the rate, while ICICI Bank had increased interest rates to 9.5%.

SBI has increased its benchmark prime lending rate by 25 basis point to 11% from Wednesday. Though this would not lead to increase in the home loan rate immediately, a bank source said it would revise home loan rate soon.

HDFC ED Renu Karnad is hopeful it will not dampen the spirits in the housing sector. However, she admitted this would affect the amount that one can borrow. Half a percentage point increase in the interest rates from 9% to 9.5% would increase the equated monthly installment from Rs 900 to Rs 932. OBC chairman KN Prithviraj blamed the rate hike on market conditions. The new rates would be effective from August 8.

By- Times of India, 02-08-06

< Independence Day IIT students to put India first | Dalmiya challenges BCCI summons >