With the Reserve Bank of India (RBI) increasing the repo rate, home loans under the floating rate regime have experienced a hike of 0.75%. Leading housing finance providers such as HDFC and ICICI Bank have once again raised the interest rates. This development directly impacts the loanees.
IMPACT OF RBI'S DECISION
HOME LOANS have become more expensive due to the increase in the interest rate (repo rate) implemented by the Reserve Bank of India when it released the first quarter review of its Annual Policy Statement, 2008-09. Just over a month ago, HDFC and ICICI Bank increased the interest rate on home loans. They have now done it again for housing loans provided under the floating rate regime.
IMPACT ON HDFC
HDFC, the country’s largest home loan provider, has raised the interest rate applicable to home loans under the floating rate regime by 0.75%. Fortunately, those who have availed home loans under the fixed rate regime have not been affected by this hike. Earlier this month, the company increased the interest rate for those under the fixed rate regime to 14%. These loanees have been spared a second increase.
IMPACT ON ICICI BANK
The country’s second largest bank, ICICI Bank, which is also involved in housing finance, has announced a similar hike in interest rates on its home loans. The new rates will come into force from August 2008.
This series of hikes underscores the impact of monetary policy changes on the real estate and housing finance sectors, highlighting the challenges faced by loanees in keeping up with fluctuating interest rates.