Bad news for buyers! Home loans to be more expensive as SBI, PNB, ICICI hike lending rates
SBI has increased its MCLR (Marginal Cost of Funds based Lending Rates) by 20 bps which is linked to the interest rate on funds raised by a bank. Likewise, ICICI Bank and PNB, which is the second largest public sector lender, have also increased their MCLR starting March 1.
By: FE Online March 3, 2018 2:47 PM
NEXT
In a setback for home buyers, home loans will be made a little more expensive. (Express photo)
In a setback for home buyers, home loans will be made a little more expensive. The country’s top lenders State Bank of India (SBI), ICICI Bank and Punjab National Bank (PNB) on Thursday announced a bad news that the lending rates would be increased for home loan borrowers. As per the report by Times News Network, the hike in lending rates has come amid the tightening liquidity or cash supply in the banking system. This has prompted India’s largest lender SBI to raise deposit rates by up to 75 basis points.
SBI has increased its MCLR (Marginal Cost of Funds based Lending Rates) by 20 bps which is linked to the interest rate on funds raised by a bank. Likewise, ICICI Bank and PNB, which is the second largest public sector lender, have also increased their MCLR starting March 1. However, the hike is slightly lower in terms of its magnitude of 15 bps. Some lenders such as HDFC Bank will review rates next week. The lending rate hike by these lenders come even as the Reserve Bank has been in an accommodative/neutral stance since January 2015. The present RBI rate or repo rate is 5.75 per cent now. Describing the development, the Finance minister Arun Jaitley has called the move as a “one-off “.
While defending the hike that will hurt all borrowers, especially the individual borrowers the most, SBI said that in the past one month, liquidity situation, which used to be in surplus has become neutral or maybe in a minor deficit mode. SBI managing director and head of retail and digital banking PK Gupta was quoted as saying that the bond yields have gone up by around 125-150 basis points over the past few months. He added that given the liquidity situation, some alignment was required and it has been done.