Home loans have become more expensive, with the country’s largest housing finance company HDFC raising interest rates by 75 basis points. HDFC has revised its floating interest rates on home loans for both existing and new customers with effect from December 1, 2010.
Following the increase in the retail PLR, new home loan customers’ adjustable rate home loans will now be priced 9.5% per annum for loans up to 30 lakh, 9.75% pa for loans up to 75 lakh and 10% pa for loans above Rs 75 lakh.
HDFC’s rates are now among the highest. ICICI Bank is providing home loans at 9.25% for loans below Rs 30 lakh and 9.75% for larger loans. LIC Housing Finance continues to provide loans up to Rs 15 lakh at 9.25%, loans between Rs 15 and Rs 75 lakh at 9.5% and 9.75% for loans above Rs 75 lakh. LICHFL’s home loan rates are fixed for the first five years, making them competitive in a rising interest rate regime.
A spokesperson for HDFC explained the rate hike, stating that since the time HDFC had last revised its prime lending rate (PLR) the yield on triple ‘A’ corporate bonds has risen by 109 bps while the yield on government securities has risen by 91 bps.
Earlier this week, HDFC and ICICI Bank both withdrew their teaser rates on home loans. The schemes, which offered lower rates on the initial two years, were scheduled to end on November 30 and were not renewed like in the past. SBI’s teaser rate scheme is valid until end-December.
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