arun

Public sector banks Punjab National Bank and Oriental Bank of Commerce have raised home loan rates by one percentage point and 0.75 percentage point respectively.

PNB has raised the interest rate for home loans above Rs 20 lakh while OBC has raised the rate for loans up to Rs 20 lakh for new customers only. PNB has also become the first among public sector banks to charge a differential interest rate to customers taking loan to buy a second home. It will charge one percentage point interest more from such customers for loans of any amount over and above the normal rates.

The home loan rate hike by PNB will be effective from May 7, while for OBC customers, it came into effect from the beginning of this month. The home loan segment has grown 30-35 per cent in the financial year 2007, prompting a concerned Reserve Bank of India to take monetary measures to slowdown the overall credit growth. Besides PNB, some private banks are charging higher interest for second home loan takers to discourage them. After the hike in interest rate, PNB floating home loan rate has gone up to 10-11 per cent from 9-10 per cent. The fixed home loan rates have increased to 11.25-12.75 per cent from 10.25-11.75 per cent. Even after the hike in home loan rates, PNB’s rate is much lower than its peer.

The housing loan portfolio of PNB stood at Rs 7,021 crore as on December 2006 whereas that of OBC was at Rs 5,000 crore as on March 2007. Like many other public sector lenders, OBC had not revised the home loan rates for loans up to Rs 20 lakh in the last three occasions when it had revised prime lending rates. The 0.75 percentage point hike in home loan rate will be for new customers and all existing customers will be unaffected. After the hike, OBC’s home loan rates has increased to 10 per cent from 9.25 per cent.