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Tuesday, March 1, 2011

HDFC hikes home loan rates again

MUMBAI: Home loans for HDFC borrowers have turned more expensive with the mortgage finance company revising its benchmark rates for the second time in less than four weeks.

On Monday, the country's largest mortgage finance company said it was increasing its retail prime lending rate (RPLR) on housing loans by 25 basis points (bps).

Last month, HDFC raised its RPLR by 25 bps to 15.25% following a 25 bps hike in key interest rates in the monetary policy.

With this, the total increase in HDFC’s RPLR this financial year, from April 2010 to date is 175 bps as compared to 175 bps to 200 bps rise in the banking and financial system, HDFC said in a statement.

For new borrowers, HDFC has maintained the rate at 9.75%, 10% and 10.25% for loans up to Rs 30 lakh, Rs 30 to Rs 75 lakh and Rs 75 lakh.

Bankers are divided on the outlook for interest rates. A section of lenders feel that liquidity is expected to increase following increased government spending.

Also since the government borrowing for the next fiscal is lower than expected, they feel that pressure on interest rates would subside. However, there are a few who feel that nothing has changed in terms of external circumstances.

If oil prices continue to remain high it is very likely that there will be either pressure on inflation or an increase in government borrowing to fund the oil subsidy.

In either case, there will be an upward pressure on interest rates.

Source: EconomicTimes


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