Loans get dearer as banks hike lending rates
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Housing and various other loans have become costlier as premier lenders like ICICI Bank and HDFC Ltd on Thursday decided to up their lending rates - a move that is estimated to add 12-20 percent of the loan size to the repayment amount.
Besides ICICI Bank and HDFC Ltd, both of which have raised their lending rates by 0.75 per cent, others such as IDBI Bank, Yes Bank and Bank of Rajasthan also announced on Thursday a hike in their lending rates. Public sector lender PNB, Axis Bank and J&K Bank hiked their rates on Wednesday itself.
The hike in lending rates by 0.5-1.0 per cent comes after RBI hiked key rates to tame rising inflation, which is rising towards 12 per cent mark.
According to industry sources, more banks are now expected to increase their lending rates in the coming days to protect their margins.
India's largest private sector lender ICICI Bank increased its floating reference rate (FRR) for consumer loans, including home loans, by 0.75 per cent to 14.25 per cent, effective from Thursday.
It also announced a 0.75 per cent hike in benchmark advance rate to 17.25 per cent.
The bank also increased interest rates for various tenors of retail fixed deposits by 0.75-1 per cent with effect from August 1.
Leading housing finance company HDFC also revised its retail prime lending rate on which floating home loan rates are benchmarked by 0.75 per cent, effective from Friday.
Following these hikes in lending rates, the floating rate home loans would be priced at a minimum of 11.75 per cent for new HDFC customers, while fixed rate would remain unchanged at 14 per cent.
The hike entails that home loan consumers would have to now fork out over Rs 1,000 more every month as EMI for a loan of Rs 20 lakh, whose repayment is spread over 20 years.
On a 11.75 per cent floating rate, the EMI is estimated to work out to around Rs 21,675 per month, up Rs 1,031 from Rs 20,644 at a rate of 11 per cent.
This would result in an overall additional burden of close to Rs 2.5 lakh over the 20-year period. For the loans taken at the top-end interest rates, the repayment would increase by up to Rs four lakh, or about one-fifth of the actual loan amount.
IDBI Bank also raised its prime lending rate by 50 basis points to 14.25 per cent from tomorrow, while private sector lenders Bank of Rajasthan (BoR) and Yes Bank also upped their BPLRs on Thursday by one per cent and 0.5 per cent to 16 per cent and 17 per cent, respectively.
BoR also hiked its RPLR by 0.5 per cent to 10 per cent, the bank said. The hike will be applicable to all types of loans under its "Apana Ghar Scheme" and for all disbursement and fresh sanctions from August 1, the bank said.
Meanwhile, Yes bank also increased its interest rates on fixed deposits across various tenors.
Besides ICICI Bank and HDFC Ltd, both of which have raised their lending rates by 0.75 per cent, others such as IDBI Bank, Yes Bank and Bank of Rajasthan also announced on Thursday a hike in their lending rates. Public sector lender PNB, Axis Bank and J&K Bank hiked their rates on Wednesday itself.
The hike in lending rates by 0.5-1.0 per cent comes after RBI hiked key rates to tame rising inflation, which is rising towards 12 per cent mark.
According to industry sources, more banks are now expected to increase their lending rates in the coming days to protect their margins.
India's largest private sector lender ICICI Bank increased its floating reference rate (FRR) for consumer loans, including home loans, by 0.75 per cent to 14.25 per cent, effective from Thursday.
It also announced a 0.75 per cent hike in benchmark advance rate to 17.25 per cent.
The bank also increased interest rates for various tenors of retail fixed deposits by 0.75-1 per cent with effect from August 1.
Leading housing finance company HDFC also revised its retail prime lending rate on which floating home loan rates are benchmarked by 0.75 per cent, effective from Friday.
Following these hikes in lending rates, the floating rate home loans would be priced at a minimum of 11.75 per cent for new HDFC customers, while fixed rate would remain unchanged at 14 per cent.
The hike entails that home loan consumers would have to now fork out over Rs 1,000 more every month as EMI for a loan of Rs 20 lakh, whose repayment is spread over 20 years.
On a 11.75 per cent floating rate, the EMI is estimated to work out to around Rs 21,675 per month, up Rs 1,031 from Rs 20,644 at a rate of 11 per cent.
This would result in an overall additional burden of close to Rs 2.5 lakh over the 20-year period. For the loans taken at the top-end interest rates, the repayment would increase by up to Rs four lakh, or about one-fifth of the actual loan amount.
IDBI Bank also raised its prime lending rate by 50 basis points to 14.25 per cent from tomorrow, while private sector lenders Bank of Rajasthan (BoR) and Yes Bank also upped their BPLRs on Thursday by one per cent and 0.5 per cent to 16 per cent and 17 per cent, respectively.
BoR also hiked its RPLR by 0.5 per cent to 10 per cent, the bank said. The hike will be applicable to all types of loans under its "Apana Ghar Scheme" and for all disbursement and fresh sanctions from August 1, the bank said.
Meanwhile, Yes bank also increased its interest rates on fixed deposits across various tenors.
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