Now, owing a dream home in India will be slightly tough as Housing Development loans Finance Corp (HDFC) has raised the interest rates on home loans for its existing and new home loan shoppers.

With effect from March 1, 2007, the floating rates have gone up by 75 basis points while interest rates for customers seeking fixed home loans have been increased by 100 basis points from 11 percent to 12 percent.

However, HDFC’s revised prime lending rate (PLR) will be 13.5 percent against 12.75 per cent. One basis point is one-hundredth of a percentage point.

The hike in the interest rates is the fallout of central bank plea to banks to set aside more cash to cover their deposits, which saw banks like State Bank of India (SBI), ICICI Bank and Punjab National Bank (PNB) raising their interest rates.

All these drastic changes were done keeping the rising inflation in India in mind.

Inflation slowed to 6.05 percent around February 17. The central bank also told banks to double provisions for lending to real estate purchases, credit cards, and personal loans and investments, to reduce asset prices.

Earlier this year, HDFC had raised its PLR by 50 bps but had left its pure fixed lending rates untouched at 11 per cent. The floating rate started at 9.5 per cent till 10.5 per cent depending on the loan amount.

And on Feb 12, HDFC Bank, which is 22 percent owned by HDFC, raised its lending rates by one percentage point to 14 percent.

Its home loans rates vary according to the amount one is seeking and its tenure. One will have to pay an interest rate of 10.5 percent if the loan amount is below 5 lakh.

Whereas, if someone goes for a loan for anything above Rs.10 lakh then he will end up paying an interest rate of 10.5 percent.

Not only that, HDFC has also raised its deposit rates under a privilege scheme where it offers 9.55 percent to senior citizens if they deposit their money for a period of 30 months.

Source Indian Realty News Bangalore Properties

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