HDFC hikes PLR by 50 basis points

The latest cycle of increase in home loan rates has been completed with Housing Development Finance Corporation (HDFC) raising its prime lending rate (PLR).

The mortgage lender with over 20 lakh customers raised its PLR by 50 basis points, its fourth such action in the last one year, to 12.75 per cent with effect from January 1, 2007.

Other large home loan providers such as ICICI Bank, State Bank of India (SBI) and Bank of Baroda have already hiked their PLRs by 50 basis points.

Analysts said the hike will help HDFC expand its margin, with competition from banks having receded from what it was for about three years till recently.

HDFC's spread on loans was 2.16 per cent in 2005-06, down from 2.17 per cent in 2004-05 and 2.20 per cent in 2003-04. HDFC's cost of funds as on March 2006 was 6.5 per cent.