| Home loan rates unlikely to come down
India's largest home finance company had plans to cut home loan rates. But now those plans are off with the Reserve Bank of India's announcement on Tuesday to hike the cash reserve ratio by half a per cent, HDFC is in no hurry to reduce interest rates.
''I don't see much impact, home rates will be stable, no reduction. We will be reviewing our rates in three to four weeks," said Keki Mistry, Managing Director, HDFC.
However mortgage companies are divided on whether there could be a small spike in home loan rates. On the one hand by allowing banks to park more funds with RBI has softened the impact of the CRR hike.
On the other hand cost of funds for banks is expected to go up and this may have a bearing on home loan rates. Banks alone are expected to take a hit of over Rs 1,300 crore this fiscal with the CRR hike which could impacts the profitability of some banks.
U.S. crisis hits local mortgages
THE US mortgage crisis has hit Australian home buyers for the first time after one lender yesterday hiked its rates by up to double last week's official interest rate rise. Bluestone, with about $3billion worth of loans on its books, yesterday blamed higher funding costs as a result of the global credit squeeze for its decision to lift its lending rates by between 17 and 55 basis points. The rise comes on top of the 25-basis-point hike prompted by last week's rise in official rates, which may not be the last this year after the Reserve Bank warned yesterday that inflation was running at the top of its comfort zone. Many economists believe the warning suggests official rates, which hit 6.5 per cent last week, will rise by a further 25 basis points before the end of the year, and possibly before the federal election.
1 Aug, 2007, 0042 hrs IST, TNN
MUMBAI: Once again, the faceless Indian and countless households will foot the bill for the war on inflation. They will have to accept lower returns on bank deposits, but will have no respite from high interest rates on home loans. Hard luck for new home buyers, who were hoping for rates to soften a little before taking the plunge.
Now, there's a higher levy on the banking system, and individual savers and retail borrowers will have to bear it. On Tuesday, Reserve Bank of India (RBI) governor Yaga Venugopal Reddy announced a hike in the cash reserve ratio (CRR) for banks by half-a-percentage point to 7%, even as he kept key rates unchanged. CRR is the slice of customer deposits that banks set aside as cash with RBI. Since this money lying with the central bank does not fetch any return, a CRR hike is like a `tax' on banks, who recover it from customers.
Credit policy won’t raise your home loan rate
Reserve Bank of India (RBI) Governor YV Reddy on Tuesday unveiled the quarterly review of the credit policy. Ordering banks to keep a tight leash on lending, it hoped to keep inflation within manageable limits. Here's how the policy affects you. Will your loans get costlier? Home loan and other consumer loan rates are unlikely to rise. There is cash aplenty, but it comes with a healthy leash. What about fixed deposits? Banks were set to cut interest rates on deposits as they had more cash to lend. With the RBI mopping up some of it, they are unlikely to cut fixed deposit rates. Reddy did this by raising the cash reserve ratio (CRR), the proportion of deposits that banks must keep as cash with the RBI, to 7 per cent from the present 6.5 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.
Interest rates unchanged in RBI's new credit policy
That should be good news for those paying back home loans in particular or is it? "I think the home loan and credit rates should not be affected. The RBI has done a fabulous balancing act," said CMD of Bank of Baroda Anil Khandelwal. The good news is on the interest rates front as the RBI has refrained from increasing interest rates two times in a row with the Bank rate remaining at 6 per cent, the repo rate at 7.75 per cent and the reverse repo rate untouched at 7 per cent. But the Cash Reserve Ratio (CRR) has been increased by 50 basis points to 7 per cent. .
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.
Fed keeps key interest rate steady
Wall Street turbulence, Main Street credit problems and a nationwide housing slump pose increasing risks to the economy, the Federal Reserve said Tuesday, even as it left interest rates unchanged. Although Federal Reserve Chairman Ben Bernanke and his central bank colleagues acknowledged challenges that have intensified since their last meeting in late June, they nonetheless expressed hope that the economy will safely make its way. The policymakers also stood by their belief that the biggest potential danger to the economy is that inflation won't recede as they anticipate. Against these economic crosscurrents, the Fed left an important interest rate at 5.25 percent on Tuesday. In turn, commercial banks' prime interest rate for certain credit cards, home equity lines of credit and other loans -- would stay at 8.25 percent.
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