New Delhi: Immediately after Reserve Bank of India hiked key short term interest rates by 0.25 per cent on Tuesday, LIC Housing Finance announced that it will raise home loan rates.
ICICI Bank has also hinted about a hike in home, auto and other consumer loans. "We have little choice other than hiking the home loan rates," LIC Housing Finance CEO, S K Mitter said.
He said rising interest rates is a matter of concern as it may affect the volume of lending. "Cost of funds have been on the rise in the last 12-15 months and the 0.25 per cent increase will put further pressure," he said.
Cost of funds has increased by one per cent in the last one year and margins are shrinking in every quarter, Mitter said, adding it is a difficult call to hike loan rates. "We will raise home loan rates, now its only a matter of when," he said.
The Board of the ICICI Bank is taking stock of the situation and is likely to announce a lending rate hike including on home and auto loan rates.
"We were anticipating a rate hike by RBI. The bank will take a call on raising the rates soon," an ICICI Bank official said.
Indications are that the bank will raise home and auto loan rates by 0.25 per cent. Most of the PSU banks and private banks are analysing the impact of short term rate hike by Reserve Bank.
RBI on Tuesday raised repo and reverse repo by 25 basis points, the rate for RBI's lending and borrowings, respectively, from banks.
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