HDFC hikes Home Loan Rates by 50 Basis Points
Banks are a large source of funds for the housing finance companies (HFCs) and an increase in their lending rate would push up the cost of funds for the HFCs. Since the latest round of monetary tightening by RBI last week, a host of banks and lending institutions have raised their rates and HDFC is one of them.
Citing the rising interest rate scenario in the economy, the mortgage major Housing Development Finance Company (HDFC) on Tuesday said it has increased the rate of interest on floating rate home loans by 50 basis points (100 basis points=1%). The last time HDFC had raised rates was in May, but had kept its rates unchanged in June when the RBI had raised the key rates by 25 basis points. The revised rate is with effect from August 1 and is in line with recent hikes in rates in the economy.
The hike comes a week after the RBI unexpectedly raised key policy rates by as much as 50 basis points.As a result of this hike in rates by HDFC, a home loan customer who has taken a 20-year loan will have to pay roughly about Rs 34 higher as EMI for every Rs 1 lakh of loan. Similarly, for a 15-year loan, the per lakh increase in EMI will be Rs 32, Rs 30 for a 10-year loan and Rs 28 for a 5-year loan.
The rise in home loan rates will affect the existing as well as new borrowers under the floating rate options, while existing borrowers under the fixed rate will not be impacted.Under the increased rate structure, for new customers, HDFC will charge 10.75% yearly rate of interest on home loans of up to Rs 30 lakh, 11% on loans of above Rs 30 lakh and up to Rs 75 lakh, and 11.50% for loans of above Rs 75 lakh.
The central bank has hiked key policy rates 11 times since March 2010 to tame rising inflation. To keep pace with the higher cost of funds in the market, banks and home finance companies too have raised interest rates for their borrowers. For HDFC’s customers, the change in rates will be effective in a staggered manner, between now and October 1, a company official said.
Among the larger banks, SBI and ICICI Bank are yet to take a decision on their lending rates. Five banks, including Indian Bank, Andhra Bank and Bank of Maharashtra, had raised lending rates by up to 50 basis points.
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