Housing Interest Rates in India

I have been doing some research on this subject. I am publishing my research results at in the following paragraphs:

Recent Housing Rate Interest Hike News

Jan 29^th 2006

HDFC hikes housing loan rates – while the fixed rate has been changed from 8.75 per cent to 9.25 per cent, the floating rate has been changed from 7.50 per cent to 8 per cent.

Feb 1^st 2006

IDBI raised its retail lending rates by 25 basis points with effect from today, from 7.25 to 7.5%

Feb 2^nd 2006

LIC Housing hikes lending rates

Mumbai, Feb 2: LIC Housing Finance Limited today increased its lending rates on housing loans by 50 basis points with immediate effect. With this hike, the minimum lending rate at the LIC Housing Finance would be 8.25 per cent.

Feb 11^th 2006

ICICI Bank raises home-loan rates

India's largest private sector lender, ICICI Bank, will increase lending rates on home loans by 50 basis points across the board beginning on Monday, a spokesman said on Saturday. The new band for floating rate loans will be 7.75 per cent to 8.5 per cent on various tenors, depending on the credit-worthiness of the borrower, he said.

Feb 21^st 2006

State Bank of India raises home loan rates 25-75 bps
MUMBAI (Reuters) - State Bank of India said on Tuesday it would raise interest rates by 25-75 basis points from March 1 on home loans, joining other financiers as cost of funds rise in the fast growing economy. State Bank said floating rate home loans for up to five years would rise by 50 basis points to 8.5 percent from March, and to 9.25 percent for 15 to 20 years. The floating rate for loans between five and 15 years will be 8.75 percent against 8.50 percent. Fixed-rate loans for up to five years will go up to 9.25 percent from 8.5 percent, and for five to 10 years to 9.5 percent from 9 percent.

Related News

Bankers foresee tight liquidity in coming months — Seek measures in budget to tide over situation

"We need more liquidity to meet the increasing credit demand. Liquidity is not tight. But in the months of February and March we foresee that there would be further increase in credit demand. To meet this expanded credit demand, we need more resources," the CMD of Punjab National Bank, Mr S.C. Gupta, said.

Third Quarter Review of Annual Monetary Policy for the Year 2005-06

• While the yield curve steepened during 2004-05, the interest rate movement was orderly notwithstanding the sharp upward movement noticed during the third quarter of the financial year.

• Overall, despite large excess liquidity in the system, interest rates moved upwards reflecting uncertainties in oil prices, upward trend in global interest rates and increasing domestic demand for credit.

• Against the background of developments during 2004-05, the stance of monetary policy will depend on several factors, including macroeconomic prospects, global developments and the balance of risks. First, the outlook for growth in 2005-06, which should be noticeably, better than the previous year, may get moderated by the conditions in oil markets which remain tight. Second, if the impact of mineral oil prices on WPI is isolated, the underlying inflationary pressures appear moderate. The supply factors will continue to dominate the price situation, while demand management seems to invite close attention.

• The India Meteorological Department (IMD) in its forecast of South-West monsoon for the current year has placed the expected rainfall at 98 per cent of its long period average. With a normal monsoon, the growth in agriculture can be assumed to be around 3 per cent. Further, it is expected that industry and services sectors would maintain their current growth momentum while absorbing the impact of oil prices. The real GDP growth during 2005-06, on the basis of above assumptions, could be placed around 7.0 per cent for the purpose of monetary policy formulation.

RBI Credit policy Review by Mr. Mahendra Jajoo

• Global consensus tends to be of the view that US Fed will take the rates to 4.75% by March'06 and that could be the end of the Fed rate hike cycle in US. So for the RBI in India, waiting for the next policy to raise rates would result into doing so at the time when globally interest rate hike cycle comes to an end. Hence, raising rates in April would be much more difficult task. Being prudent enough in its policy making decisions, it has proactively hiked the rates before the global rate hike cycle comes to an end.

• In view of prevailing tight liquidity conditions in the economy, post IMD redemptions in Dec'05, market was largely expecting a CRR cut which was not given by RBI, though it continues to pursue its medium term objective of reducing the CRR to the statutory minimum level of 3%.

• The chances of a further rate hike in the annual policy statement for 2006 – 2007 due on April 18, 2006 would seem remote.