Tag: icici home loan rates

EMIs set to rise as ICICI Bank, HDFC hike rates

23 Aug 2013, ENS Economic Bureau

Borrowers will have to shell out more money as EMI (equated monthly instalment) on their home and auto loans with two leading lenders, ICICI Bank and HDFC, jacking up interest rates.

ICICI Bank, India’s second largest lender, has announced an increase of 0.25 per cent in its base rate with effect from August 23. The revised rate will be 10 per cent as against 9.75 per cent at present. Home loan major HDFC has increased its Retail Prime Lending Rate (RPLR), on which its Adjustable Rate Home Loans (ARHL) is benchmarked, by 0.25 per cent with effect from August 23.

“In February this year HDFC had reduced its RPLR by 10 bps and hence on a net basis the RPLR is higher only by 15 bps since January 2013,” HDFC said.

ICICI Bank has also announced an increase of 0.25 per cent in its benchmark prime-lending rate and in its Floating Reference Rate (FRR) for consumer loans (including home loans) with effect from August 23. This benchmark rate is used for determining interest rates on loans and advances sanctioned up to June 30, 2010. With effect from July 1, 2010, interest rates on new loans and advances, including consumer loans, are determined with reference to I-Base.

ICICI Bank has also announced an increase of 0.25 per cent in its benchmark prime-lending rate and in its Floating Reference Rate (FRR) for consumer loans (including home loans) with effect from August 23, 2013.

The above benchmark rates are used for determining interest rates on loans and advances sanctioned up to June 30, 2010.

The fixed rate customers will not be impacted by the above revision and their contracted rates will remain unchanged.

The RBI’s cash-tightening measures had pushed short-term money market rates along with government bond yields to higher levels, creating fear of increase in cost of funds for financial institutions. But RBI had indicated that these measures were short-term in nature and would be rolled back as and when the rupee is stabilised.

As of now, the rate hike is restricted to private banks as their cost of funds has increased while none of the leading PSU banks have announced a hike in rates so far. Banks with heavy reliance on the wholesale funding are the ones raising the lending rates as the rates in the money markets hardened following the RBI moves.

“Our cost of funds is in tact. SBI is also flush with deposits,” SBI chairman Pratip Chaudhuri said while ruling out a hike in rates last week.

On Monday, Axis Bank hiked its base rate, the minimum lending rate, by 25 basis points, to 10.25 per cent, pushing up the cost of home and auto loans. This means all categories of loans will become costlier at least by 0.25 per cent. Earlier this month, HDFC Bank, the country’s second largest private lender, had raised the base rate to 9.80 per cent from 9.60 per cent.

Increased cost of funds

* ICICI Bank has announced an increase of 0.25% in its base rate with effect from August 23

* The revised rate will be 10% as against 9.75% at present

* HDFC has increased its Retail Prime Lending Rate (RPLR), on which its Adjustable Rate Home Loans (ARHL) is benchmarked, by 0.25% with effect from August 23

* The RBI’s cash-tightening measures had pushed short-term money market rates along with government bond yields to higher levels

ICICI Bank offers 1% cash back on home loan EMIs in festive scheme

2 Nov 2012, PTI.

MUMBAI: ICICI Bank today launched a limited period offer of one per cent cash back on gross EMI (equated monthly instalment) value as part of a festival scheme.

“Under this cash back offer, one per cent of every EMI will be returned to the customer, apart from providing the option of renewable fixed interest rate for the entire tenure free of cost,” the bank said.

Customers can choose to avail of this cash back offer either in the form of a credit to their account or in the form of a principal pay-down, it added.

The offer will run through the end of December for new customers. The scheme covers renewal/switchover of fixed/floating rate loans without any processing fee, ICICI Bank Executive Director and Retail Business Head Rajiv Sabharwal told reporters in a conference call.

The cash back money could be credited to the borrower’s account or adjusted against the principal outstanding from the third year including the first two years’ dues, and by the end of the fiscal from fourth year onwards, Sabharwal said.

When asked whether the bank has priced in the impact of the new offering on the margins, he said, it will be negligible and that the focus is on customer retention by rewarding loyal customers.

As credit pick-up remains lukewarm, many banks have launched attractive schemes to woo customers in.

Last month, its rival Axis bank launched a scheme wherein a home loan borrower will get 12 EMIs waived if he/she remains with the bank for 15 year or more.

Many state-run banks, including SBI, UCO Bank, Vijaya Bank, and Central Bank, have hit the market with combo loan offers, wherein a home loan customer gets a car loan without the process fee, apart from slashing interest rates by up to 0.50 per cent and the processing fee by half.

According to ICICI bank, the offer can hugely benefit the borrowers. For instance on a 20-year loan of Rs 50 lakh, priced at 10.50 per cent, a customer can gain as much as Rs 1,19,806 in cash back or if it is adjusted against the principal outstanding, the accrued benefit will be Rs 3,63,538 at the end of the loan repayment.

Sabharwal also said the offer includes an option to remain on fixed or floating rate at no cost.

Asked whether this could be considered a dual rate product he said, “to some degree yes, as the pricing varies from year to year, but not in the strict sense of the word as there is no differentiation in the pricing between a fixed customer and a floating rate one.”

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