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Mumbai:
Housing Development Finance Corporation (HDFC)has announced
its intention to hike interest rates on its home loans
after Diwali. "We plan to raise rates across maturities
by 50 basis points next week," Deepak Parekh, charman
HDFC told journalists on the sidelines of a conference
here on Monday.
The
pressure on interest rates has been building up steadily
in tandem with the hardening of yields in the domestic
debt markets.
The
10-year benchmark government paper, maturing in 2014
with 7.37 per cent yield-to-maturity, jumped to 7.28
per cent, sharply higher than its levels in the first
week of October at 6.45 per cent.
Added
to this, the Reserve Bank of India (RBI), in the mid-term
review of its annual policy statement, increased the
risk weights that banks will have to assign on home
loans to 75 per cent from 50 per cent and on consumer
credit to 125 per cent from 100 per cent.
Industry
analysts are of the view that the RBI's move addressed
concerns of an "asset bubble" being created
by banks aggressively lending in retail.
The
increase in risk weights meant that banks would have
to set aside additional capital for their retail portfolios,
and it was inevitable that this cost would be passed
on to customers.
But
State Bank of India, the country's biggest commercial
lender, is unlikely to raise home loan rates in the
immediate future. Speaking to journalists on Monday,
A K Purwar, chairman, SBI, said, "There is some
upward pressure on interest rates and we are examining
various issues."
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