ICICI Bank, HDFC raise home loan rates by 75 bps

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Mumbai, Jul 31: Major mortgage lenders ICICI Bank and Housing Development Finance Corporation (HDFC) raised their rates by 75 basis points on Tuesday, after the Reserve Bank (RBI) hiked the cash reserve ratio (CRR) by 25 basis points and repo rate by 50 bps this week.

Other banks, including the state-run Central Bank of India and IDBI Bank and the private sector Bank of Rajasthan, also announced rate hikes as the impact of the RBI measures became clear.

Central Bank of India hiked its BPLR by 50 basis points, which will come into effect from August 1, 2008. IDBI Bank increased its BPLR by 50 bps to 14.25%, which will come into effect from August 1. However, the bank has not touched its deposit rates. Bank of Rajasthan increased its benchmark prime lending rate (BPLR) by 100 basis points (bps) to 16% and retail prime lending rates (RPLR) on home loans by 50 bps from August 1, 2008.

ICICI Bank has announced an increase of 0.75% in its floating reference rate (FRR) for consumer loans (including home loans) with effect from July 31. The revised FRR will be 14.25% per annum against 13.50% at present. However, the existing fixed rate customers will not be impacted by the increase and their contracted rates will remain unchanged, the bank said.

The bank has also announced an increase in interest rates for various tenors of retail fixed deposits by 0.75% to 1% with effect from August 1, 2008. The bank also increased its Benchmark Advance Rate (I-BAR) by 0.75%. The revised I-BAR will be 17.25% p.a. against 16.50% p.a. now.

HDFC has revised its floating interest rates on home loans for both existing and new customers with effect from August 1, 2008.

The housing finance majorhas increased its retail prime lending rate (RPLR) on which its adjustable rate home loans (ARHL) is benchmarked, by 0.75% with effect from Friday. The increase in RPLR will affect existing borrowers whose loans come up for re-pricing on or after August 1.

HDFC follows a three-month reset cycle for its floating rate loans and hence the change in RPLR will impact the existing customers over the next three-month period.