IDBI Homefin raises lending rates

IDBI Homefinance Ltd today raised its retail prime lending rate (RPLR) by 25 basis points to 9.5 per cent with effect from March 31, 2005, in view of the firming up of interest rate.

This will affect 88 per cent of the over Rs 900 crore loan portfolio of the housing finance subsidiary of Industrial Development Bank of India (IDBI). The rest of the loan portfolio is at a fixed rate, adjustable every three years.

Melwyn Rego, managing director & chief executive officer, IDBI Homefinance, said the impact of the upward revision in the benchmark rate will be marginal with the repayment period increasing only by a few months.

For variable interest rate loans, the equated monthly installment (EMI) remains the same while the repayment period increases or decreases depending on whether the interest rate is revised upwards or downwards.

IDBI Homefinance had kept its RPLR unchanged when other housing finance players raised their PLRs about six months back.

Over the last two years, IDBI Homefinance brought down its RPLR by an aggregate of 2.75 percentage points.

IDBI Homefinance's revised variable interest rates for loans upto 5 years would be 7.75 per cent, for loans above 5 years and upto 15 years 8.25 per cent and for above 15 years and upto 20 years 8.5 per cent.

Rego said an interest rate hike was deferred in October-November 2004 to pass on the benefit of low cost of funds to its customers. The changed interest rate scenario has forced the decision to marginally increase RPLR.