BHUBANESWAR: With a series of rate hikes ahead of the RBI’s policy review beginning October 3, it can be safely assumed that interest rates are set to harden. HDFC, State Bank of India, ICICI Bank and Punjab National Bank (PNB) are among those who have already hiked lending rates.
Interestingly, this is the third rate hike in FY19, when banks managed to steal a march on RBI, which is expected to hike rates.
Mortgage lender HDFC has increased its retail prime lending rate (RPLR) by 10 basis points with immediate effect. The new rates vary from 8.08 per cent to 9.05 per cent on various slabs of loans, making home loans costlier. The hike was warranted in the wake of an overall increase in the financial system over the last two days.
Earlier, SBI raised its on-year marginal cost of funds-based lending rate (MCLR) by five basis points (bps) to 8.5 per cent, while ICICI Bank hiked the rate by 10 bps to 8.65 per cent. PNB too hiked MCLR for short-term loans by up to 0.2 per cent or 20 bps, while it left the one-year rate unchanged at 8.45 per cent.
Experts say if you have a floating rate loan, your interest burden just went up. The continued rate hikes by banks will also dampen the festival spirits pushing up EMI costs. Meanwhile, the good news is that SBI would announce a waiver in processing fees for home loans and other loans for the festive season alone.
Some analysts expect a 50 bps hike, while the majority is of the view that rates will be revised upwards by 25 bps.
“We expect a 25 bps hike in repo rate in October policy and it may not be the last in the financial year. We rule out a hike of 50 bps, as it may spook the market. However, there is an outside probability of change in neutral stance too, as three successive rate hikes, with a neutral stance could contradict RBI’s message,” said Soumya Kanti Ghosh, group chief economic adviser, SBI, in a note.