SBI Hikes Home Loan Rates, Others To Review

Mumbai, Aug 30 | Updated: Aug 31 2004, 05:58am hrs
State Bank of India on Monday hiked its interest rates on new home loans by 0.25-0.50 per cent even as other banks and housing finance companies are reviewing their rate structures.

Meanwhile, the bank ruled out any immediate hike in lending rates amid fears of a rise in interest rates in the economy due to surge in inflation.

The countrys largest commercial bank raised home loan rates under fixed rate option by 0.25 per cent for five year tenure, making 8 per cent as effective rate for this bracket.

The interest rate on loans in the 5-15 year tenure would be 8.75 per cent as against 8.25 per cent earlier, according to SBI .

The loans in 15-20 year bracket would now attract 9 per cent rate as against 8.50 per cent.

The bank would provide a one-time facility to those with floating rate option to switchover to fixed rate by paying a fee of 2.75 per cent, including service tax and education cess, of the loan outstanding.

ICICI Bank senior general manager V Vaidyanathan said it had no plans to raise rates now and they are likely to remain stable in the system for some time. A senior official with corporation bank said state-owned bank had raised rates by 0.25 per cent early this month and do not see immediate hike, though we review it continuously.

Hinting at prospects of hike in rates, LIC Housing Finance chief executive A Dasgupta said rates are up for review as costs of borrowing have gone up.

If the cost (of borrowing) turns unsustainable, the rates are likely to go up, Mr Dasgupta said.

I am an advocate of stable rates. The short-term outlook for lending rates is absolutely stable, SBI chairman AK Purwar said after meeting finance minister P Chidam-baram in New Delhi.