Housing Development and Finance Corp (HDFC) on Monday announced raising home loan rates for existing as well as new customers by much as 75 basis points (100 basis points=1%). HDFC is the leader in the home loan market.

To add more to agony of the home buyers, even ICICI Bank, the largest private sector in India, too announced increase in the home loan rates by the same basis points as of HDFC.

Both the entities also announced raising deposit rates. The hike in interest rates as well as deposit rates for HDFC is effective July 1 while for ICICI Bank it was June 30.

Post this hike, for existing HDFC customers, for every Rs 1 lakh of home loan of 20 years tenure under the floating rate, the increase in monthly installments would be Rs 34 while for loans of 15 years, the increase would be Rs 32. For new customers, for every Rs 1 lakh of loan for 20-year tenure, the EMI would work out to Rs 1,033.

Reserve Bank of India (RBI) raised key rates for banks last week by 50 bps, the second increase this month, which actually lead to the hike in the home loans. The RBI decision was aimed at bringing down inflation rate, which, at 11.42% last week, is at a 13-year high level.

However, HDFC has raised floating rates by 50 basis points (bps) for the old customers, while new customers would be faced with a hike of 75bps. This will spare some inconvenience to the existing customers of the bank. In ICICI Bank, the 75bps hike is across-the-board.

For new home loan customers with HDFC, the floating rate of interest would be at a minimum of 11% per annum, while the fixed rates will be at 14%, a release from the company said. HDFC has also increased its rates on deposits by 50 basis points for most tenure.

The other banks too have taken a stride in the phase of hiking home loans. Vijaya Bank has hiked its benchmark prime lending rate 25 basis to 13.25 basis points, while Allahabad Bank has increased the Benchmark Prime Lending Rate by 50 basis points to 13.50 per cent with effect from July 1.

SBI, the country's biggest bank, increased its lending rate by 50bps to 12.75% last Thursday. Most of the PSU banks like SBI, Union Bank of India, Punjab National Bank, State Bank of Bikaner & Jaipur and Corporation Bank - have also increased the rates.

Indian Overseas Bank has raised its benchmark prime lending ratio “only by 25 basis points” on account of increase in cost of funds, the bank said.