Not willing to absorb the rising cost of borrowings, home loan major Housing Development Finance Corporation (HDFC) raised its retail prime lending rate (RPLR) by 50 basis points on Tuesday to 14.25%. Since the mortgage firm?s adjustable home loan rates are benchmarked to the RPLR, the increase will impact all existing customers over the next three months. In other words, home loans will become costlier by 50 basis points.
According to an HDFC spokesperson, after the increase in the RPLR, floating rate loans up to Rs 30 lakh will cost 9.25% while loans between Rs 30 lakh and Rs 50 lakh will be available at 9.5%. Floating rate loans above Rs 50 lakh will cost home buyers 9.75%. Fixed rate loans, available at the same rate throughout the tenure of the loan, currently cost 14%.
Said Keki Mistry, vice-chairman and MD,?The higher prime lending rate reflects the increase in borrowing costs which are being passed on to customers. We had not increased rates like some of the others had so we?re doing it now.?
SBI had extended its teaser rates for home loans in early July, for three months, till end September. The rate is a eight per cent, which is 0.5% higher than its minimum lending or base rate. SBI fixed its base rate, the minimum lending rate, at 7.5%.
In a sign of how intense the competition in the consumer banking space has become, banks have been wooing customers with cheaper loans even as interest rates are on the rise. Consumer loans could be now available even at 150 basis points less than they were for the next few months as banks unveil special offers. So keen are banks to grow their loan books that some of them are going to the extent of relaxing the margin requirements for customers, allowing them to put out a smaller share of the cost of house.
PNB CMD KR Kamath said, ?We are planning to lend at lower rates to small borrowers. Car loans will be cheaper by 50 basis points and will be available at 10%, while home loans for up to Rs 50 lakh will be available at a fixed rate of 8.5% across maturities whereas these are now being at 10-10.5%. SBI chairman OP Bhatt added, ?Our festive offers for retail borrowers will be out soon and we believe that if we bring down rates, consumers will borrow because typically people do buy cars or houses during the festive season.??
It may be recalled that State Bank of India and ICICI Bank had raised their benchmark prime lending rates (BPLR) by 50 basis points each after the central bank hiked key policy rates on July 27, 2010. Punjab National Bank(PNB) had hiked its BPLR by 75 basis points. The new benchmark PLR for SBI is 12.25% while that for ICICI Bank, it is 16.25%.