Mumbai, June 30: Housing Development Finance Corporation (HDFC) and ICICI Bank — two of the largest home loan financiers in the country — today raised their lending rates.

HDFC increased its benchmark rate by half a percentage point while ICICI Bank upped it by three-quarters of a percentage point.

As a result, floating rate home loan borrowers will have to pay higher equated monthly instalments (EMIs). New fixed rate borrowers will also have to pay a higher rate.

There is a rule of thumb here: for every half a percentage point increase in the interest rate, the EMI will rise by more or less Rs 34 per month per lakh for a 20-year loan.

HDFC announced that it had revised its interest rates on home loans with effect from July 1. The corporation increased its retail prime lending rate (RPLR) to 14.25 per cent to which its adjustable rate home loans (ARHL) are linked, by 50 basis points with effect from July 1.

The increase in RPLR will affect existing borrowers whose loans come up for re-pricing on or after July 1. HDFC follows a three-month reset cycle for its floating rate loans. Hence, the change in RPLR will impact the existing customers only over the next three-month period.

HDFC said that for new home loan customers, the ARHL loans would now be priced at a minimum of 11 per cent while the fixed rates would be at 14 per cent.

The corporation also increased its rates on deposits by half a percentage point across most maturities.

ICICI Bank announced a sharper hike of 75 basis points in its floating reference rate (FRR) for consumer loans, including home loans, with effect from June 30. The country’s largest private sector bank said the revised FRR would be 13.50 per cent as against 12.75 per cent earlier.

For existing floating rate customers, the increase in floating reference rate (FRR) will be effective from July 1. The existing fixed rate customers whose loans are fully disbursed will, however, not be impacted, it added.