HDFC, ICICI Bank hike home loan rates by 75 bps

State Bank Increases Rates By 50 Bps

HOUSEHOLD budgets, already stretched by spiralling prices, will get further strained due to higher outgo on home loans. Home loan market leader HDFC on Monday announced a 50 basis points hike in interest rate for all existing borrowers with floating rate loans. For new borrowers, the hike will be as much as 75 basis points on floating as well fixed rate loans.
    This means that the EMI for new customers will be Rs 1,033 for every Rs 1 lakh on a 20-year loan. For existing floating rate customers, the EMI will increase by Rs 34 for every Rs 1 lakh loan with an outstanding tenure of 20 years.
    Under the revised rate structure, the floating rate for new borrowers is 11%, while the fixed rate is 14% — a level last seen in the mid-90s. The rate hike will be effective from July 1.
    Minutes after HDFC's announcement, the country's secondlargest bank, ICICI also announced a 75 basis points hike in the fixed as well as floating home loan interest rate. The fixed rate of interest for ICICI home loans will now be 14.75% — possibly the costliest in the sector.
    State Bank of India (SBI) has also decided to raise interest rates on home and auto loans by 50 bps on all credit linked to prime lending rates (PLR).
    The revision in PLR came after SBI raised its PLR from 12.25% to 12.75% last week following the Reserve Bank of India increasing its key short-term lending rate to banks and the mandatory cash deposits (CRR)that banks need to keep with the central bank by 50 bps each. Punjab National Bank also raised its PLR to 13%.
    The only solace for households is higher returns on deposits. Both HDFC and ICICI Bank have increased the interest rate on deposits. While HDFC has hiked it by 50 bps, ICICI will offer 50 to 100 bps more to new deposits and renewals. Canara, BoI spare home loans
    IT MAYbe mentioned that HDFC had lowered its PLR by a quarter point in February. Meanwhile, two government banks Canara Bank and Bank of India decided to spare home loan and auto loan borrowers from the rate hike, even as they increased interest rates for other categories of borrowers. Canara Bank and Bank of India have raised their PLRs by 50 bps to 13.25%, but left home loan and auto loan rates untouched. On a floating rate basis, Bank of India offers home loans in the band of 9.25-10% and Canara Bank charges 10-10.75%.
    On Monday, two other state-owned banks — Allahabad Bank and Dena Bank — announced their decisions to raise PLRs. Both banks have raised PLRs by 50 bps to 13.5%. Meanwhile, Canara Bank, Allahabad Bank and Dena Bank also raised their deposit rates by 25 to 75 basis points, while Bank of India is yet to take a decision on the same.