Indian banks have raised interest rates by 25-50 bps which will make loans for Indian real estate more expensive going forward.

Signalling a hardening of interest rates, private sector banks have started raising retail lending rates.
ICICI Bank, the country’s largest private sector lender, says it is going to charge 25 to 50 basis points more for auto loans and has discontinued its teaser offer on Indian real estate and home loans.

Similarly, HDFC Bank has increased auto loan rates 25 to 50 basis points. Kotak Mahindra Bank has increased interest rates on auto and home loans by a similar amount.

The new Indian real estate and home loan rates came into effect from Monday along with the end in the teaser rate, which offered 8.25 per cent on loans of all values for the the first year.
The new rates will be applicable to fresh loans.

ICICI Bank has also reworked the slabs, charging 8.75 per cent a year for loans up to Rs 30 lakh, instead of the earlier Rs 20 lakh ceiling. For Indian real estate and home loans between Rs 30 lakh and Rs 50 lakh, their rate has been revised to 9 per cent (from 9.25 per cent for loans between Rs 20 lakh and Rs 50 lakh) and loans above Rs 50 lakh will cost 9.5 per cent a year (from 9.75 per cent).

“It is a message that interest rates will not go down further, they will only go up. But it (the increase) will only be to the extent to which we can protect our margins,” said Pralay Mondal, country head for retail assets and credit cards at HDFC Bank, the country’s second largest private sector bank.

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Tags: HDFC home loans, ICICI home loans, Indian home loans, Indian interest rates, Indian Real Estate

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