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Loan rate hikes: Yes Bank & ICICI go first

Following RBI’s CRR & repo rate googly on Friday, Yes Bank was first out of the gate, raising its Prime Lending Rate (PLR) from 14% to 14.75%. But of much more significance is the 1% hike in loan rates by ICICI Bank, over the weekend.

  • ICICI Bank has a home loan portfolio of around Rs 60,000 crore of which about 90% is at floating rate.
  • ICICI will now lend floating rate loans at 12% and fixed rate loans at 14%.
  • We had increased our deposit rates this month but had left lending rates untouched. Hence, this move will enable us to pass on the increase in costs.

Note that ICICI & HDFC are the big daddies in the Indian home loan market; think of ICICI’s cumulative loan portfolio above in the context of the annual home loan market in India: Rs 75,000 to 80,000 crores.

Real estate speculators - watch out!

This entry was posted on Sunday, April 1st, 2007 at 10:38 am and is filed under economics, real-estate. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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    One Response to “Loan rate hikes: Yes Bank & ICICI go first”

    1. Avinash Says:
      April 2nd, 2007 at 9:55 am

      Umm thats is interesting , i would now expect real-estate investors to get squeezed as the demand will fall , this will force them to sell thus creating more pressure. The same phenomenon as in stocks , but here it plays over several years :)