HDFC hikes loan rates by 50 bps

The country's biggest mortgage lender, Housing Development Finance Company (HDFC), today announced 0.50 basis points across the board increase in its interest rates on home loans for the second time in three months.

HDFC had hiked its lending rates three months ago on February 1, 2006 by a similar margin. Most commercial banks also had raised their home loans. One basis point is one hundredth of 1 per cent.

The decision by HDFC comes soon after the country's biggest bank, State Bank of India, raised interest rates on home loans by 25 to 50 basis points to pass on to borrowers the increase in cost of funds.

SBI had earlier increased home loan rates two months back. HDFC is also likely to increase interest rates on deposits, following on a 25 basis points hike in deposit rates on April 3, 2006.

HDFC has raised its prime lending rate to 11.75 per cent from 11.25 per cent. Its floating rate now starts at 9 per cent, fixed rate at 10.5 per cent and fixed rate with money market option (fixed for two years) at 9.75.

The other large home loan provider, ICICI Bank, has decided to wait till the end of the current quarter for a decision on further hikes in interest rates.