HDFC, ICICI increase rates

If you have taken a Rs 10 lakh home loan your EMI will increase by Rs 510 for a term outstanding of 20 years. This steep rise has come in the wake of the strong message sent out by the Reserve bank of India governor, Mr Y.V. Reddy that money should not be leant cheap.

The country’s two biggest home loan lenders HDFC and ICICI Bank announced a steep hike in interest rates on loans on Thursday.

HDFC has revised its floating interest rates on home loans for both existing and new customers by 0.75 per cent with effect from August 1, 2008, while ICICI Bank has increased its interest rates for various tenors of retail fixed deposits by 0.75 per cent to one per cent. It also increased its floating reference rate for consumer loans (including home loans from 13.50 per cent to 14.15 per cent. This follows the hike in the CRR and repo rate announced in the credit policy on Tuesday.

HDFC bank said "This is in line with the rates of interest in the economy, which have hardened due to the rising inflation and shrinking liquidity in the domestic market."

HDFC bank has increased its retail prime lending rate (RPLR) on which its adjustable rate home loans (ARHL) are benchmarked, by 0.75 per cent. It will affect existing borrowers whose loans come up for re-pricing on or after August 1, 2008. The bank said it follows a three month reset cycle for its floating rate.