Home loan rates start going up

Kicking off another round of interest rate hike, India8217;s leading home loan firm HDFC and government-owned Punjab National Bank have increased their home loan rates by half a percentage point.

Kicking off another round of interest rate hike, India8217;s leading home loan firm HDFC and government-owned Punjab National Bank have increased their home loan rates by half a percentage point. Other banks are set to follow suit in the coming days.

With this hike, the floating rate for home loans of HDFC will be 9.5 per cent from earlier 9 per cent, while the new fixed rate will be 11 per cent from 10.5 per cent. The primary lending rate of HDFC will be 12.25 per cent against earlier 11.75 per cent. The move follows the hike in repo and reverse repo rates by the Reserve Bank of India last week.

This is the third home loan rate hike by the industry in the last one year.

Delhi-based Punjab National Bank today announced 0.5 per cent hike in home loan rates and 0.25 per cent increase in other lending rates. 8216;8216;Interest rate on housing loan is hiked by 50 basis points while benchmark Prime lending rate BPLR has been raised by 25 basis points,8217;8217; a senior PNB official said. The new lending rates are effective from today.

Other major home loan lenders8212;State Bank of India and ICICI Bank8212;said they are evaluating their options.

After the Reserve Bank increased short term rates by 0.5 per cent in the last two months, most of the banks and housing finance companies had said they would raise lending rates as high cost of funds might affect profitability.

HDFC chairman Deepak Parekh has said consistently that real estate prices in the country have not reached unrealistic levels and it will fall by at least 10 to 20 in the months to come. The expensive loan rates will just expedite the overheated real estate markets.

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In the case of PNB, floating home loan interest rates have gone up to 8.75 per cent for a maturity period of up to 5 years, to 9 per cent for 5-10 years, to 9.25 per cent for 10-20 years and to 9.75 per cent for 20-25 years.

Similarly, the fixed home loan rates has gone up to 10 per cent from 9.75 percent for loans upto 5 years. The bank increased its BPLR by 25 basis points, or 0.25 per cent, to 11.50 per cent. That means, the bank has hiked interest rates for all other loans including for auto and personal loans by 0.25 per cent.

HDFC8217;s loan sanctions were up by 30 per cent to Rs 5998 crore for the quarter ending June while its disbursal was up 28 per cent to Rs 4386 crore 8212; almost on par with the rest of the industry.