HDFC, ICICI Bank hike housing loan rates

Mortgage loan major Housing Development Finance Corporation (HDFC) and the country's largest private sector lender ICICI Bank have increased interest rates on housing loans effective next week.

HDFC Bank announced a 75 basis point increase in all its existing and new floating rate loans beginning 8 December while ICICI Bank will increase interest rates on all loans and term deposits by up to 50 basis points beginning Monday.

Coming a day after RBI governor D Subbarao asked banks to hike deposit rates and lower lending rates, the increase in lending rates by the two major lenders may again put breaks on real estate sector that is currently seeing a revival in business.

HDFC yesterday announced an increase in interest rates for all its existing floating rate customers by 75 basis points. For new customers, however, the increase in rates would be 50 basis points.

Existing customers will now have to pay according to the new rates, which will be their respective current rates plus 75 basis points, while new customers will get loans at 9.5-10 per cent per annum, depending upon the loan amount.

The additional burden on existing HDFC customers with the hike in home loan rates would translate into additional EMI outgo of around Rs51 for every Rs1 lakh worth of loan of 20 years tenure. Likewise, for every Rs1 lakh worth of loan for 15 years, the additional EMI outgo would amount to approximately Rs48 for 10 years, the corresponding amount being around Rs45.