HDFC, ICICI hike home loan rates

Home owners who bought their dream house with loans from banks or financial institutions should ready themselves for a bigger hole in their pockets. Buying a house with a loan just got costlier. On Thursday, a host of home loan companies, led by sector leader HDFC, raised interest rates on home loans. HDFC and private banking major ICICI Bank raised their housing finance rates by 75 basis points (100 basis points = 1%), which will affect all customers under the floating rate as also new customers opting for fixed rates.
Home loan and other loan rates have been on an upward swing for almost five years now. It was in October 2003 that home loan rates dipped to a low of 7.5-7.75%. Under the changed home loan rate structure, for customers who had opted for floating rate loans, for a 20-year loan of Rs 20 lakh, the equated monthly instalment (EMI) will rise by Rs 1,030, while for a Rs 50 lakh loan the additional outgo would be Rs 2,576 and for a Rs 1 crore loan it would be Rs 5,152.

New home loan rates to take effect from today

New Delhi: Under the changed home loan rate structure, for customers who had opted for floating rate loans, for a 20-year loan of Rs 20 lakh, the equated monthly installment (EMI) will rise by Rs 1,030, while for a Rs 50 lakh loan the additional outgo would be Rs 2,576 and for a Rs 1 crore loan it would be Rs 5,152. The new rate will come into effect from Friday.
New customers with HDFC’s floating rate loans will pay at least 11.75% per annum, while those opting for a fixed rate would pay at least 14%. For ICICI Bank, the rates are slightly higher.
While floating rate loans from ICICI Bank would cost about 12-12.25% per annum, customers who have taken a fixed rate will have to pay at the rate of 15.50%.
Industry watchers believe that with most sector leaders hiking rates, following Tuesday’s RBI decision to raise key policy rates, more banks and financial institutions would raise deposit and loan rates. State Bank of India, the country’s largest bank and also a major player in the home loan sector, is yet to announce any decision on its rates.
Existing home loan customers of HDFC as well as ICICI Bank who are under the fixed rate structure will not be impacted by the recent changes in rates.
On Thursday, ICICI Bank also raised its lending rate for corporate and non-retail loans (called I-BAR), and also its deposit rates. While it has raised deposit rates between 0.75% to 1% for various tenures, the revised I-BAR would be 17.25%, an ICICI Bank release said. Two other banks, Yes Bank and Bank of Rajasthan, have also revised their rates upward. The recent increase in rates was necessitated by the rising interest rates in the economy, “which have hardened due to rising inflation and shrinking liquidity in the domestic market,” a release from HDFC said.
Thursday’s rise in rates comes on the heels of hike in rates by Punjab National Bank, Axis Bank and Jammu & Kashmir Bank on Wednesday.

1 Comment

  1. Venkatesh

    Sorry, I didnt know where to post this question. I am not from Chennai but am interested in buying an 2 BR apartment in Marg Swarnabhoomi. Is it a worthy investment (5-10 yrs) and for giving it out on rentals? What is the future growth in this area? Please advise.

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