HDFC ups home loan rates

Interest For Floating Rate Clients To Be Hiked By 50 Bps From Mon

TIMES NEWS NETWORK 

Mumbai: Home loan customers under floating rate with Housing Development Finance Corp (HDFC) shou ld brace themselves to pay higher interest from Monday. 
    The mortgage financing major on Saturday evening said they would raise the interest rate by 50 basis points (100 basis points = 1%) for floating rate customers from May 16. This comes after the inflation rate prompted the Reserve Bank of India to increase key policy rates by 50 basis points (bps) on May 3, following which all banks, including SBI, ICICI, HDFC Bank and IDBI, hiked their lending rates. "HDFC has decided to revise its retail prime lending rate (RPLR) from May 16, 2011 by 50 bps (to 16%). This is in line with the increase in interest rates in the economy, which have hardened mainly due to high inflation," a release from HDFC stated. All loans from the housing finance major is linked to the RPLR. 
    However, the change will not affect customers who have taken home loan under the fixed rate. For customers under the floating rate scheme, depending upon their current outstanding principal, the number of equated monthly installments (EMI)s to pay the loan fully, will go up. According to its policy of calculating interests and EMIs, the HDFC will apply the new rates on its existing customers in a phased manner, but the increase will be effective throughout the next three months. 
    The rise will also impact new customers. Under its floating rate structure, the HDFC will charge 10.25% per annum interest rate for loans of up to Rs 30 lakh, 10.50% for more than Rs 30 lakh but below Rs 75 lakh and 11% for more than Rs 75 lakh. However, the financing major has left the interest on fixed rate home loans unchanged at 11.50%, even for new customers. 
    After the increase, home loan rates from all top institutions in the sector such as SBI, ICICI Bank and HDFC, will be nearly on a par with each other. 
    Since March 2010, the RBI has raised policy rates eight times, by about 225 basis points, while banks and financial institutions have increased it five to six times, as initially, they had the option to partially absorb the impact of the hiked rate.