With this increase, the interest rates on home loans will now start from 8%, the company said. Prior to this, the company in June the retail prime lending rates by 60 bps to 7.50%.
Mortgage financier LIC Housing Finance has increased its prime lending rates by 50 basis points (bps), effective August 22. With this increase, the interest rates on home loans will now start from 8%, the company said. Prior to this, the company in June the retail prime lending rates by 60 bps to 7.50%.
The company will levy interest rate of 8.05% interest rate on home loans up to Rs50 lakh on borrowers with CIBIL score of 700, 8.30% on those with CIBIL score of 600-699 and 8.75% on those with a score less than 600, as per its website.
“The hike in repo rate has caused some minimum fluctuation in the equated monthly installments (EMI) or the tenure on the home loans but demand for housing will remain robust. Hence, the interest rate hike of LIC HFL is in line with the market scenario,” Y Viswanatha Gowd, managing director and chief executive officer said.
On August 5, the Reserve Bank of India (RBI) increased repo rate by 50 bps to 5.40%. LIC Housing Finance will take decision on lending rates after the RBI policy rate meeting, Gowd had earlier said. Earlier this month, Housing Development Finance Corporation (HDFC) twice raised its retail prime lending rate by 25 bps, once on August 9 and on August 1.
In its post-earnings analyst call, HDFC said that it has shifted to resetting interest rates for home loan borrowers on a monthly basis from quarterly basis as the company saw impact of rising interest rates on its margin.
Banks and other lenders are increasing their lending rates since the RBI has increased the repo rate by 140 bps since April. Almost all banks increased their external benchmark loan rates and marginal cost of funds based lending rates after the latest hike in repo rates.
