With major banks and housing finance companies (HFCs) raising mortgage rates, a number of home loan customers with floating rates will have to undertake tweaking of the calculation on EMIs (equated monthly installments).
The State Bank of India ( SBI) recently raised its lending rates, taking its effective home loan rate to 10.25 per cent. Similarly, ICICI Bank and HDFC Bank, too, followed suit. After the latest round of rate hikes, SBI's home loan customers would pay 100 basis points (bps) above its base rate of 9.25 per cent; thus the effective rate becomes 10.25 per cent.
In the last two years, interest on home loans has gone up by at least 200 basis points (100 basis points equals 1 per cent), from about 8 per cent to above 10 per cent. A quick back-of-the envelope calculation shows that home loan rates have increased by about 25 per cent.
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