Banks not to hike home loan rates

Retail bank customers need not worry about any rise in the equated monthly installments (EMIs) on their home loans or auto loans with banks expected to absorb the rate hikes by Reserve Bank of India. The special home loan rates of banks will continue for now.

OP Bhatt, chairman and managing director of State Bank of India, said their special home loan rate of 8 per cent is open till September 30.

“We will take a call at that time,” Bhatt said.

Private banks, which had a special home loans scheme of 8.25 per cent, may continue for a while as CEOs of all large banks agreed that raising lending rates is not immediate on their agenda.

If banks keep their rates static, housing finance companies like HDFC and LIC Home Finance will also follow suit to keep the rates at present levels.

“Home loan rates will not be impacted immediately. Everything will depend on what action banks take on the pricing of their retail loans. Our special schemes are on till the end of August after which we will take a call depending on the interest rate situation at that time,” VS Rangan, executive director of HDFC, said.

HDFC has a fixed and floating rate product that keeps interest fixed at 8.25 per cent for the first year and 9.25 per cent for the second year and from the third year onwards it reverts back to the prevailing rates of interest.

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