Home loans get costlier; repayment to rise by over 12%

New Delhi: Home loans just got costlier with the lending institutions on Thursday announcing a hike in their interest rates by an average of 0.75 per cent a move that would increase repayments by a minimum of about Rs 2.5 lakh for a Rs 20-lakh loan.

Consumers would have to fork out over Rs 1,000 more every month as EMI for a loan of Rs 20 lakh, whose repayment is spread over 20 years.

Market leader HDFC today announced a hike of 0.75 per cent in its retail prime lending rate, on which its adjustable home loans are benchmarked, with effect from August 1.

While a few banks already announced rate hikes yesterday, others are expected to soon follow suit.

HDFC said that for new home loan customers, the adjustable rate loans would now be priced at a minimum of 11.75 per cent. Fixed rate remains unchanged at 14 per cent.

On a 11.75 per cent floating rate, the EMI is estimated to work out to around Rs 21,675 per month, up Rs 1,031 from Rs 20,644 at a rate of 11 per cent.

This would result in an overall additional burden of close to Rs 2,50,000 over the 20-year period.

The rates are being revised in the wake of tight monetary measures announced by RBI on Tuesday, when it asked the banks to maintain higher mandatory cash reserves with it and also increased its short-term key lending rates for them. Avdhoot Investment or read more on Housing Loan here