Mumbai, Aug. 22: Home loan borrowers of Housing Development Finance Corporation (HDFC) and ICICI Bank will now have to pay higher equated monthly instalments (EMIs), with both lenders raising their benchmark rates by 25 basis points today.
The country’s largest housing finance company HDFC raised its retail prime lending rate (RPLR), on which its adjustable rate home loans (ARHL) or floating rate home loans is benchmarked, by 25 basis points to 16.65 per cent with effect from tomorrow.
ICICI Bank announced a similar hike in its ICICI Bank base rate (I-Base) to 10 per cent. The hike will affect both its existing and new borrowers.
The base rate is the minimum lending rate below which banks cannot lend.
In the case of ICICI, an increase in the benchmark rate will also affect its auto loan borrowers.
According to banking experts, a 25-basis-points hike in lending rates will push EMI up by Rs 17 per lakh for a loan of 20 years.
HDFC said in a statement that since it had reduced its RPLR by 10 basis points in February, on a net basis, the current increase is only to the tune of 15 basis points since January.
With the latest revision, HDFC will offer home loans up to Rs 30 lakh at 10.40 per cent and at above Rs 30 lakh at 10.65 per cent.
A number of banks have raised their lending rates in the recent past following the liquidity tightening measures taken by the Reserve Bank of India (RBI) to protect the rupee. This has resulted in borrowing costs for many banks rising as short-term market rates inched up.
Axis Bank, the country’s third largest private sector lender, recently raised its base rate by 25 basis point. Its peers such as HDFC Bank, Yes Bank and Kotak Mahindra Bank have also hiked their lending rates.
Among the nationalised banks, Andhra Bank raised its benchmark rate to 10.25 per cent, making auto, home and corporate loans dearer.
The country’s largest bank, the State Bank of India, has so far desisted from increasing its lending rates, although banking experts feel a hike is in the offing.