Home buyers get yet another jolt from HDFC
APRIL 3, 2007: The country’s largest
housing finance company HDFC has raised lending
rates by 75 basis points for new customers,
while interest rates for existing customers
is up 50 bps. on Saturday.
HDFC’s floating rate loan for new customers
is now pegged at 11.25%, while customers borrowing
at a fixed rate will be charged 13.25%. Its
prime lending rate (PLR) has now been revised
to 14.25%, up from 13.5%.
Meanwhile, HDFC Bank and UTI Bank have both
raised PLR from 14% to 15% on Monday. Last
week, ICICI Bank raised its benchmark advance
rate to 15.75%, while Yes Bank raised its
PLR to 14.75%. State-owned banks are yet to
take a view on their lending rates. A number
of banks are considering to raise their lending
rates after the Reserve Bank of India (RBI)
announced an increase in cash reserve ratio,
repo rate and a reduction on interest paid
on CRR.
Most PSU banks may raise rates by circular
resolution, taking approval by seeking written
consent from each of the director on the board,
instead of waiting for a board meeting to
take place. This is because the finance ministry
has asked state-owned banks to take the board
approval before revising lending rates.
Meanwhile, for HDFC’s customers, who
have taken loans on a floating rate basis,
this is the fourth rate hike since May 2006
when the floating rate loan was pegged at
9%. Around 85% of HDFC’s customers have
taken loan on a floating rate basis. The 50
bps hike will translate into a Rs 32 hike
each month on a loan of Rs 1 lakh borrowed
for 20 years.
The interest rate on home loans began moving
up since December 2005 after touching an all-time
low of 7.5% in February 2003. On Monday, UTI
Bank has raised the home loan rates by 50
bps for floating rate home loan customers
to 11%, but it does not offer home loans at
fixed rate. The bank, which has recently entered
the car loan segment, has increased the car
loan rates by 200 bps. New car loan rates
for tenures of less than three years are 16.5%,
while that for three to five years is 15%.
While HDFC Bank had raised its PLR, it has
currently left the interest rates on its retail
asset portfolio like auto loans, personal
loans and others untouched. According to officials,
it will look at the impact on its deposit
rates in the next three-four days before taking
a final decision.
ICICI Bank, another large home loan provider,
is charging 12% for floating rate home loans
and 14% for fixed rate home loans. While State
Bank of India is charging 10.75% for floating
rate home loans and 12.25% for fixed rate
home loans.
However, SBI’s fixed home loans rates
are subject to a reset every two years. SBI
is yet to take a view on lending rates. Its
PLR now stands at 12.25%. For customers of
HDFC Bank, this is the fourth hike since June
2006 when it was pegged at 11%, while UTI
Bank had hiked its PLR twice in the last fiscal.
Source:Economic Times
