Mumbai: A day after the RBI hiked its repo rates, banks are gathering the nerve to tell their retail customers the bitter truth. Home loan rates need to be hiked by at least half a percentage point. Which means the rate for a 10-year loan that stood at 7.50 per cent is all set to go up to 8 per cent.
Home loans are all set to become expensive, and housing finance major, HDFC may be the one to lead the pack.
Sources in HDFC say the rates will be increased anytime soon by at least 0.25 per cent to 0.5 per cent. Currently HDFC offers a floating rate loan between 7.5 per cent to 8.25 per cent and a fixed rate loan between 8.75 per cent to 9.25 per cent.
Sources say there is no decision yet which of these slabs will be increased, but it is quite likely that the fixed rate loan will not be touched as they are already quite high.
HDFC's archrival ICICI Bank also maintains that rates should be increased very soon, but it may wait till the monthend to announce any such revisions.
Sources in large PSU banks say that not only will retail lending rates go up, but sub PLR rates for corporates are also likely to go up by .25% to .5%.
However, while it is bad news for borrowers, it is good news for depositors and pesnioners. First of all, the banks are very likely to raise their fixed deposit rates soon.
Banks like Bank of Baroda, Union Bank and Bank of India say they are likely to raise their fixed deposit rates along with lending rates. Sources in State bank of India say there has been no decision from the top management to increase rates as yet, but its asset liability committee is expected to meet this week.
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