| Watch that credit score! It could end up costing a lot
Not paying attention to your credit score can cost you a lot of money. Many people don't know that their score -- a three-digit number derived from an analysis of how they handle debt -- is the key determinant of what interest rate they'll pay on credit cards, auto loans and home mortgages. The lower a person's score is, the higher the interest rate and, therefore, the higher the cost for the loan. A new study by the Consumer Federation of America and Washington Mutual Inc., the Seattle-based savings bank, found that fewer than six out of 10 Americans have obtained their credit scores, and half of those surveyed consider their understanding of the scores as "fair" or "poor." Stephen Brobeck, executive director of the nonprofit CFA, which is based in Washington, D.C., said he found the statistics disturbing because consumers can't work to improve their scores if they don't know what the scores are.
More rate rises predicted
THE Reserve Bank of Australia is likely to lift interest rates again early next year as inflation levels are expected to rise, economists say. Commonwealth Bank of Australia chief economist Michael Blythe said today the RBA was likely to lift interest rates from their present 6.5 per cent after the election, which is expected towards the end of 2007. Responding to the Reserve Bank's quarterly monetary policy statement, released this morning, Mr Blythe said the statement included "some fairly tough words on inflation (with) some big upward revisions higher than what most people were expecting". "Clearly, despite the volatility on financial markets, the risk of interest rates are still skewered to the high side," Mr Blythe said. The RBA's statement said underlying inflation was already running at an annual rate of about 2.75 per cent, near the top of its target range of 2 to 3 per cent.
Private banks hope to cut home loan rates
High liquidity and inflation remaining below 5 per cent for six weeks in a row have raised banks' hopes for a cut in home loan rates after the credit policy review on July 31. But it is unlikely to be broad-based cut with public sector banks preferring to remain away from slashing rates. Private banks, which effected severe hikes over the last few months, however, may slash them. The Reserve Bank of India (RBI), however, is not likely to signal reversal of upward trend in interest rates in the upcoming credit policy review on July 31, according to experts. The reversal in benchmark interest rates like reverse repo rate and repo rate could be seen only by the year-end, they say. “Public sector banks have been quite considerate of home loan borrowers. We did not hike rates twice when private banks did so.
HDFC posts 40% growth in interest income
Be it higher rates or higher property prices nothing seems to be deterring consumers from buying homes.
Earnings from the country's largest home lender HDFC reflect strong growth in lending as well as lending margins despite a sharp rise in interest rates.
Loans and disbursals for the quarter rose solid 29 per cent with margins rising to 2.22 per cent from 2.18 per cent from the previous quarter. This led to a 40 per cent growth in net interest income and a 26 per cent growth in PAT.
"We have seen no slowdown in lending because of rates, demand is strong and we have also managed to not only maintain our margins but also grow our margins, " said Keki Mistry, Managing Director, HDFC.
While HDFC's market leadership position has helped it maintain growth, other banks in the home loan market have not been as fortunate.
Interest rate rise No.2 tipped
THE prospect of interest rates jumping to 6.75 per cent in early 2008 increased significantly yesterday following the release of the Reserve Bank of Australia's statement on monetary policy. Even after factoring in last week's interest rate rise, the bank said inflationary pressures in the economy were at the top of its target band. The RBA yesterday lifted its core inflation forecast for December and throughout 2008 from 2.5 per cent to 3 per cent growth -- signalling another rate rise was on the agenda. Economists said it was a clear statement from RBA governor Glenn Stevens that rates may rise but was unlikely this year because of the looming federal election. The RBA statement said: "With the economy growing at a higher-than-average pace, capacity pressures are likely to persist in the near term".
Market eyes RBI policy meet
Mumbai, July 29: The stock market will next week look up to the Reserve Bank of India, which will take a call on the interest rate regime on July 31, for further cues after taking a 542-point plunge on last week. The sharp fall on last trading day of the past week was triggered by sluggish global trends following reports of a weakness in the US housing market. The Indian housing market is also witnessing a correction with rising interest rates over the past few quarters and high property prices leading to a fall in home loan disbursals by the two biggest mortgage lenders in the April-June quarter, as compared to the first quarter of this calendar year. RBI will review its monetary policy on July 31 to decide on its course of action on key interest rates. However, some analysts expect good earnings to provide a cushion to the market as despite a sharp fall in the Sensex some counters had gained on better June quarter results.
ICICI Bank's Profit Rises 25 Percent on Loans, Fees (Update2)
July 21 (Bloomberg) -- ICICI Bank Ltd., India's second- biggest bank by assets, said first-quarter profit rose 25 percent as increasing interest rates failed to deter borrowings and the lender earned more from fee income and international operations. Net income in the three months ended June 30 rose to 7.75 billion rupees ($192 million) from 6.2 billion in the same period a year earlier, the bank, which completed India's biggest share sale last month, said today in an e-mailed statement from Mumbai. That was higher than a 7.49 billion rupee median estimate of five analysts surveyed by Bloomberg News. ``The bank has shown good profit growth based on a rise in fee income,'' said R.K. Gupta, who manages 3.5 billion rupees at Credit Capital Asset Management in New Delhi.
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