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Home loans become costlier New Delhi, April 29 Industry sources said ICICI Bank, India's second-largest lender, is also likely to announce a 50-75 basis points increase in interest rates on home loans next week. Some banks have already announced hike in home loan interest rates, and others like Punjab National Bank are expected to take a decision in the next few days. The decision of the banks follows, say banking experts, Reserve Bank of India’s hike in banks' risk weight for exposure to the real estate to 150 per cent from 125 per cent and tightening of provisioning norms on personal loans at its annual monetary policy earlier this month. “The Board of Directors of the OBC today decided to revise primary lending rate from 11 per cent to 11.5 per cent leading to hike in home loan interest rates by 0.5 to 0.75 per cent,” said CMD of the bank K.N. Prithviraj. The floating interest rate on home loans has been increased from 8 per cent to 8.5 per cent for loans up to 5 years’ period, from 8.25 per cent to 9 per cent for loans of 5-10 year and above period. The fixed interest rate on home loans has also been revised upward by 75 basis points. OBC has already increased interest rate on deposits by 25 to 50 basis points. Meanwhile, market leader SBI hiked home loan rates by increasing the State Bank Average Rate (SBAR), from 10.25 per cent per annum to 10.75 per cent with effect from May 1, 2006. The fixed rate for loans up to 5 years will be 9.50 per cent, and up to 10 years it will be 9.75 per cent. The corresponding floating rates will be a minimum of 8.75 per cent and 9.25 per cent respectively, SBI informed the BSE. “Loans above 10 years and up to 15 years will have a minimum interest rate of 9 per cent and loans above 15 years and up to 20 years a minimum rate of 9.25 per cent. No fixed rate loans will be provided for these tenures,” it said. The bank has also increased deposit rates for mid-term deposits between 25-50 basis points. Earlier in March, UTI Bank and HSBC had hiked home loan rates by 0.5 per cent. UTI Bank had also raised its corporate PLR by 100 basis points from 12 per cent to 13 per cent. HSBC has hiked its benchmark home loan rate from 8.5 per cent to 9 per cent, while UTI Bank hiked it from 7.5 per cent to 8 per cent. |
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