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75 basic points increase on home loan- Tougher times ahead |
| Written by Bernard Kayden | |
| Thursday, 10 July 2008 | |
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The home loan borrowers will definitely witness a tough monthly budget due to an increase in the interest rates by many lenders.<br><br> India (Paisawaisa) July 07, 2008: In a wretched situation where household budgets have been disturbed by the spiralling cost of living, higher outgo on the home loans will definitely worsen the scenario further. Home loan market leader HDFC recently announced a 50 basis points hike in interest rate for all its existing borrowers of floating rate loans. The hike for new borrowers will be as much as 75 basis points on floating as well fixed rate loans. The hike is due to the increase in the CRR and repo rate. The increase will lead to higher EMI for new customers. According to the calculation, the revised EMI will be Rs. 1,033 for every Rs. 1 lakh on a 20-year loan. The existing floating rate customers will face an increase of Rs. 34 for every Rs. 1 lakh loan with an outstanding tenure of 20 years.After revision, the floating rate for new borrowers will be 11%, while the fixed rate is 14%. The rate hike is effective from July 1 . This increased level was last seen in the mid-90s when the economy was trying to follow the shoes of liberalisation, globalisation and privatisation. After HDFC, the second largest player of the home loan segment, ICICI has also announced a flat 75 basis points hike in the fixed as well as floating home loan interest. State Bank of India (SBI) has increased interest rates on home loans and auto financing by 50 basic points on all credit linked to prime lending rates (PLR). The only solace in such a situation for households is higher returns on deposits (fixed and termed). Both HDFC and ICICI Bank have increased the interest on termed deposits. While HDFC has hiked the interest rate by 50 bps, ICICI will offer 50 to 100 bps more to new deposits and renewals in the fixed deposit segment. Earlier, HDFC had lowered its PLR by a quarter point. However, two government banks, Canara Bank and Bank of India, decided to spare home loan and auto loan borrowers from the rate hike even as they increased interest rates for other loan plans. For additional information on the news that is the subject of this release (or for a sample, copy or demo), contact Webmaster or visit http://www.paisawaisa.com |
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