Immediately after Reserve Bank of India (RBI) hiked key short term interest rates by 0.25%today, LIC Housing Finance announced that it will raise home loan rates.ICICI Bank has also hinted about a hike in home, auto and other consumer loans."We have little choice other than hiking the home loan rates," LIC Housing Finance CEO S K Mitter told PTI.He said rising interest rates is a matter of concern as it may affect the volume of lending. "Cost of funds have been on the rise in the last 12-15 months, and the 0.25% increase will put further pressure," he said.Cot of funds have increased by 1% in the last one year and margins are shrinking in every quarter, Mitter said, adding it is a difficult call to hike loan rates. "We will raise home loan rates - now it is only a matter of when," he said.The board of directors of ICICI Bank is taking stock of the situation, and is likely to announce a lending rate hike including home and auto loan rates. "We were anticipating a rate hike by RBI. The bank will take a call on raising the rates soon," an ICICI Bank official said.Indications are that the bank will raise home and auto loan rates by 0.25%.Most of the PSU banks and private banks are analysing the impact of short term rate hikes by the Reserve Bank.RBI today raised repo and reverse repo by 25 basis points.
