PRICEY FUNDS TRIGGER MOVE

Normal 0 false false false EN-US X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} Pvtbanks hike rates for home, car loans HDFCBank, ICICI Bank and Kotak Mahindra have raised rates onhome and auto loans, reflecting thestiffening market that may lead to the Reserve Bank of India (RBI) hasteningwith a lift in its policy rates from record lows to fight inflation. Theseprivate banks have raised lending rates by as much as 100 basis points, followingthe hardening of market rates even as the central bank holds on to low rates toavoid derailing the economic growth. A basis point is 0.01 percentage point.RBI has started slowly rolling back some liquidity-boosting measures and hasindicated it may not hesitate to raise rates. It raised the cash reserve ratioby 75 basis points in the last review. “Autoloan rates have been marginally increased by 50 bps,” said Pralay Mondal,country head (retail assets & credit cards), HDFC Bank. “The increase inthe cost of funds is being passed on to customers. It has been done to protectour margins.” Banksare raising lending rates to maintain their profitability after they increaseddeposit rates in the last few months to attract funds that were beginning to goto higher-yielding stocks and realestate . Investors are seeking higher returnsinstead of safe bank deposits since prices are running far ahead of theinterest rates that banks are offering, leading to negative real returns. Withthe partial rollback of tax cuts in the budget, cars, televisions, petrol andtravel have become expensive, which could fuel inflation further. Food pricesare rising at 18%. Easymoney becoming history Thefirst signs of interest rates hardening came from the bond markets where yieldson the benchmark 10-year bond have risen 10-12 bps since the budget. Since theRBI announced the 75 basis point hike in cash reserve ratio requirement, yieldshave gone up by 40 bps. The yield on the 10-year government securities areclose to 8%, up nearly 3 percentage points from their lows last year. Times ofeasy money are slowly becoming history. “Wehad increased fixed deposit rates by 75 bps in the past couple of months. Theincrease in lending rates is to align it with the rise in deposit rates,” saidKamlesh Rao, head (retail assets), Kotak Mahindra Bank. AxisBank was the first to cease its teaser loan rates in February after themonetary policy. The bank was offering a fixed rate of 8.25% for two years.Others who pulled out cheap loans are the government owned Union Bank andCanara Bank. But bigger ones that are flush with funds such as State Bank ofIndia and Punjab National Bank and even Bank of Maharashtra are continuing withteaser rates, which the RBI has warned against. Teaser rates loans are thosewhere interest rates are low in early years, but progressively climb, making ittough for consumers to repay. This is similar to the US subprime loan regimewhich caused the global credit crisis. Theincrease in lending rates, which comes just before the end of the financialyear, is an indication that lenders are bracing for an end-of-the-yeartightening in markets. Liquidity is scarce in mid-March when corporate remittheir advance taxes to the government. ICICI Bank will now charge 8.75% forloans up to Rs 30 lakh, 9% between Rs 30-50 lakh and 9.5% for loans over Rs 50lakh. It was earlier offering loans at 8.25% for two years. From the third yearit would have been floating reference rate minus 3.5%. The bank has also hikedits auto loan rates by 25-50 bps from March 5, thus increasing the rack ratesto 9.75-11%. HDFC’s home loanrates have reverted to 8.75% for loans up toRs 30 lakh, 9% for loans between Rs 30 lakh and Rs 50 lakh and 9.25% for loansover Rs 50 lakh. Till last month, it was offering loans at a fixed rate of8.25% up to March 31, 2012, after which the loan would revert to the prevailingfloating rate. KotakMahindra has increased its auto loan rates by 50-100 bps. With this hike forsuper premium cars, the rates would now be 9.25-9.75%. For premium segment carsit would go up to 10-10.25% while for lower end cars the rates would be10.75-11%. Lastmonth, Kotak Mahindra discontinued the fixed rate loan which was introduced inDecember. The bank had last month increased its floatingrate home loans by 50 bps. It is now in the range of8.50-9%. The rates on personal loans also went up by 50 bps to around 18.5%.Existing customers can breathe easy for now. But their outgo may begin to risesoon. Courtesy:-ET dt:- 05-Mar-2010 For more information regarding apartment in mumbai, bedroomapartments, buy property in india, commercial complex in india, commercial realestate, commercial space in mumbai, dealers, flats for sale, indian real estateinvestment, investment options in real estate, luxurious flats, malls, officespace, office space in mumbai, online real estate, penthouses mumbai, plots,property consultants, property in mumbai, property india, property investment,real estate company, real estate developer, real estate mumbai, real estate inindia, real estate investment strategies, real estate market, real estate news,real estate portals, realtors, realty, residence, residential real estate, sellproperty, shop, villas, Residential Apartment   Visit    www.zameen-zaidad.com             www.propertycafeteria.com  

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