HDFC floating rates up 50 bps

Floating rate home loans from Housing Development Finance Corporation (HDFC) are dearer effective Monday, following a hike of 50 basis points in the corporation's retail prime lending rate (PLR).

HDFC has, however, left interest rate on fixed rate loans unchanged at 8.25-8.75 per cent since it was last revised upwards in October by 50 basis points.

The corporation's PLR has risen from 9.75 per cent to 10.25 per cent. Floating rate loans will be priced between 7.5 per cent and 8.25 per cent, depending upon the tenor, amount of the loan and individual choice.

HDFC is the third in the industry to increase home loan rates following on the heels of ICICI Bank and IDBI Bank.

"We were waiting for the RBI credit policy, which confirmed our take on interest rates," Suresh Menon, general manager operations, Mumbai, HDFC told Business Standard.

The corporation's chairman Deepak Parekh had earlier stated that HDFC would review its rates post-Diwali.

"After four years of downward movement in interest rates, we are now seeing a pressure on interest rates with short-term cost of funds expected to rise and long-term yields having already crossed seven per cent," said Menon.

HDFC revisited its interest rates on Saturday on the back of rising inflation figures and the cost of funds. India's wholesale price index rose to 7.76 per cent on Friday, accelerating sharply from 7.06 per cent a week earlier on the back of higher energy prices.

Bond prices have moved up by 200 basis points in the past few months and the cost of borrowing for triple A companies have increased since April, stated HDFC in a press communiqué.