HSBC, UTI Bank to hike home loan rates

 HSBC has hiked its mortgage lender rate (MLR), the benchmark rate for home loans, by 50 basis points to 9%.

A senior UTI Bank official said: "With this hike, home loans taken on a
floating rate basis will become costlier by 50 basis points - for example from 7.5% charged earlier to 8%. Corporate loans will also get dearer with the prime lending rate (PLR) hike."

 UTI Bank has raised its corporate PLR by 100 basis points from 12% to 13%.

Housing loans comprise a major chunk of retail loans of both banks. For HSBC, mortgage loans account for almost 70% of the retail loans portfolio. UTI Bank's retail loans portfolio increased 40% to Rs 5,778 crore at the end of December 2005 from Rs 3,917 crore in the year-ago period. The private sector bank's retail advances accounted for 30% of total advances at the end of December 2005.

 Housing Development Finance Corporation (HDFC) increased its lending rate by 50 basis points in February, and has geared up for another 50 basis points hike next month.

 ICICI Bank recently raised its home loan PLR by 50 basis points to 9.25%, and has also stopped offering interest rate discounts on home loans. It had also increased the interest rate on auto loans by 100 basis points.

 ICICI Bank has raised its PLR for lending to companies by 175 basis points in three stages since January 2006 to 12.75%.