Business Daily from THE HINDU group of publications
Wednesday, Aug 02, 2006
Business Daily from THE HINDU group of publications Wednesday, Aug 02, 2006 |
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Interest Rates Money & Banking - Housing Finance Home loan rates, PLR go up Our Bureaus
Zooming northwards SBI and PNB raise PLR by 25 bps HDFC and BoB home loan rates up 50 bps ICICI on wait-and-watch mode
Mumbai/New Delhi , Aug. 1 Banks and housing finance companies have started hiking lending rates by 25-50 basis points. SBI raised its Prime Lending Rate (PLR) by 25 basis points, while HDFC jacked up home loan rates by 50 basis points. Other banks that have announced hike in lending rates on Tuesday include Bank of Baroda and Punjab National Bank. This is the first round of hikes in rates after the RBI increased its key short-term interest rates. HDFC increased its minimum floating rate to 9.5 per cent from 9 per cent and fixed rate to 11 per cent from 10.5 per cent with immediate effect. This is the third time in the calendar year and the second time this financial year that HDFC has hiked its interest rates by 50 basis points. "We had hiked interest rates in February and May, but left it untouched when the RBI hiked key short-term rates in June. After the recent interest rate hike by the RBI in July, home loan interest rates have been increased to meet the cost of borrowing," said an HDFC official. This means that with a 50-basis-point hike, the tenure of the floating rate loan with a 15-year term will increase by 11 months or the EMI will edge up by Rs 28 per lakh. This latest hike has brought HDFC on par with ICICI Bank in terms of its home loan rates. SBI, the second largest player in the home loan segment, raised its PLR by 25 basis points, said a senior official from the bank. The SBI PLR has gone up to 11 per cent with effect from August 2. Floating interest rates on home loans up to five years will go up to 9 per cent; on loans of 5-15 years it will go up to 9.75 per cent; and on loans of 15-25 years it will go up to 10 per cent. The bank had last raised BPLR and home loans on April 29 this year by 50 bps. Bank of Baroda also increased the floating interest rate on home loans by 50 basis points with effect from August 1. The revised floating home loan rate is in the range of 9 to 10 per cent on loans of five-25 years' tenure. Punjab National Bank has raised PLR by 25 basis points from 11.25 per cent to 11.50 per cent per annum with immediate effect. It had last raised its BPLR on May 1 this year from 10.75 per cent to 11.25 per cent. For floating rate home loans, interest has been increased by 50 basis points for all repayment tenures except for 20-25 years, wherein the increase is 25 basis points. For the fixed option, the interest rate has been increased by 25 basis points and the bank would review the interest rate every fifth year. Mr S.K. Mitter, Director and Chief Executive, LIC Housing Finance, said that the company held a quarterly review of interest rates and with effect from August 1, the floating interest rate has gone up to a minimum of 9.5 per cent and the fixed to 11 per cent. Currently, 95 per cent of LIC Housing Finance's customers have opted for the floating rate. For a Rs 10-lakh loan with a 20-year term, the EMI will increase by Rs 600, Mr Mitter said. ICICI Bank, the largest player in the home loan segment, will wait and watch the impact on the cost of funds, said Ms Chanda Kochhar, Deputy Managing Director, ICICI Bank.
Related Stories: More Stories on : Interest Rates | Housing Finance
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