HDFC home loans become dearer

Mumbai: HDFC bank's housing loan across all segments become costlier by 50 basis point from Tuesday.

The bank, in the announcement made on Monday evening, however, did not revise its prime lending rate (PLR) which remains unchanged at 11.75 per cent.

HDFC's fixed lending rate for housing loans goes up to 11 per cent and of floating rate to 9.5 per cent with effect from May 2.

The home-loan leader HDFC had hiked its rates by 0.50 per cent in February after the quarterly review of monetary policy increased repo and reverse repo rates to contain inflation.

Earlier on Saturday, State Bank of India had joined with other banks like Oriential Bank of Commerce and Punjab National Bank in raising interest rates by 0.25- 0.50 per cent from Monday, in the face of RBI hiking risk provisioning for loans above Rs 20 lakh in its credit policy.

Bank of Baroda had hiked PLR by half a percentage.

Though many of the public sector banks had been experiencing liquidity crunch, they had refrained from hiking home loan rates adopting a wait and watch approach.

The home loan rates had reached a rock bottom of 7 per cent by 2003 after various banks resorted to rate war to woo customers, creating a boom in the housing sector.

However, to improve the quality of loans, RBI has now increased the risk weight provisioning from 0.4 per cent to one per cent for home loans beyond Rs 20 lakh.

PNB, the country's second largest public sector lender, said it increased PLR by 0.50 per cent to 11.25 per cent. SBI, PNB and BoB have also hiked interest rates paid to depositors by 0.25-0.50 per cent.