Banks raise lending rates, home loans get costlier

BANKING FOR DREAM HOME: ICICI Bank's new lending rates would come into effect soon.

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Mumbai: HDFC Bank and ICICI Bank on Thursday hiked their floating home loan rates by 0.75 per cent, a decision that would increase the overall repayment by an estimated over 12 per cent.

ICICI, the country's biggest private sector lender, increased the interest rate for retail fixed deposits by 0.75-1.00 per cent, with effect from Friday.

The bank announced an increase of 0.75 per cent in its floating reference rate for consumer loans, including for housing, with effect from Thursday.

HDFC said it has revised its retail prime-lending rate—on which adjustable rate home loans are benchmarked—by 0.75 per cent, effective from Friday.

For new HDFC customers, the floating rate for home loans would be priced at a minimum of 11.75 per cent but fixed rate would remain unchanged at 14 per cent.

ICICI said that the revised floating reference rate for its consumer loans would increase to 14.25 per cent, from 13.5 per cent presently. There would be no change in its fixed rate loans

ICICI also announced a hike of 0.75 per cent in its benchmark advance rate, which would now increase to 17.25 per cent from 16.5 per cent currently.

The bank’s consumers would have to now fork out over Rs 1,000 more every month as EMI for a loan of Rs 20 lakh and repayment spread over 20 years.

The banks announced the new measures after the Reserve Bank of India (RBI) on Tuesday raised its key lending rate by 50 basis points to a seven-year high of 9.0 per cent on Tuesday to curb inflation, now running close to 12 per cent, and dampen inflationary expectations.