INTEREST RATES START MOVING UP

Private Banks Make Auto Loans Costlier, Withdraw Teaser Home Offers
If you were planning to buy a car or a house, prepare to shell out a little more. Signaling that the interest rates in the country have bottomed out, leading private sector banks, HDFC Bank, ICICI Bank and Kotak Bank, on Thursday raised interest rates on auto loans between 25 and 75 basis points (100 basis points = 1%). Simultaneously, ICICI Bank also discontinued its special home loan product from March 1 while a similar scheme by housing loan major HDFC expired on February 27.
Both HDFC and ICICI Bank were offering housing finance at 8.25% per annum for the first two years followed by a move to the prevailing floating rate. As of now, only banking major SBI is still continuing with its 8% special home loan rate. It was SBI that was first off the block with its special rate, which is often referred to as the 'teaser rate'.
Bankers said the end of special rates is partially because of the tighter situation in the money market, which, of late, has witnessed some credit off take. Industry officials also attributed the closure of these schemes to RBI's displeasure with the teaser rates. Spokespersons from ICICI Bank, Kotak Bank and HDFC confirmed these recent developments.
On the auto loan front, ICICI Bank on Thursday raised loan rates between 25 and 50 basis points, depending upon the tenure of the loan and the type of vehicle being financed. After the increase, the rate of interest will be between 9.75% and 11%.
HDFC Bank, too, raised rates by about 50 basis points with the new rates now in the range of 9-11%.
On its part, Kotak Mahindra Bank has decided to raise auto loan rates by 50-75 basis points, effective Friday. The new rates will be between 10.25% and 10.75%, a top official at Kotak Mahindra Prime, the auto finance arm of the bank said. In the housing finance segment, ICICI Bank will now charge 8.75% for loans up to Rs 30 lakh, 9% for loans of Rs 30 lakh and Rs 50 lakh and 9.5% for loans of over Rs 50 lakh, the spokesperson said. In comparison, HDFC now charges 8.75% for loans of up to Rs 30 lakh, 9% for loans between Rs 30 lakh and Rs 50 lakh and 9.25% for loans of Rs 50 lakh and above.
Bottoming Out
 HDFC Bank, ICICI Bank and Kotak Bank raised rates on auto loans between 25 and 75 bps
 ICICI Bank also discontinued its special home loan rate of 8.25% from March 1, while a similar scheme by HDFC expired on February 27
 Tight situation in the money market and RBI's displeasure with the teaser rates led to closure of special schemes, believe bankers
Courtesy:- TOI dt:- 05-Mar-2010
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