LIC Housing finance hikes lending rate by 60 bps, home loans start at 7.5%

Says hike is in line with market scenario; rates are still very competitive and demand for home loans is to likely to sustain

Factoring in the hardening of rates in the system, LIC Housing Finance Ltd (LIC HFL) today increased its benchmark Prime Lending Rate (LHPLR) by 60 basis points. The pricing of home loans is linked to the benchmark rate.

The new interest rates on home loans now start from 7.50 per cent for borrowers having a credit score of 700 and above. The new rates will be effective from June 20, 2022, LIC HFL said in a statement.

This follows Housing Development Finance Corporation’s (HDFC) 50 basis points hike in its Retail Prime Lending Rate (RPLR) on housing loans on June 10. Effectively, HFDC’s home loan rates would start at 7.55 per cent. Last week, Indiabulls Housing Finance (IBHFL) also revised its reference rates on home loans and MSME Loans by 50 basis points.

Meanwhile, in Emailed response to queries HFC said today it also revised upwards interest rate on deposits ranging between 5 bps to 35 bps depending on tenure. Earlier it had revised deposit rates last month.

These revisions come after the Reserve Bank of India raised its policy repo rate on June 8 by 50 basis points to 4.90 per cent in order to tame high inflation. The repo rate is the rate at which RBI lends short-term funds to banks.

Y Viswanatha Gowd, managing director and chief executive of LIC Housing Finance, said the hike is in line with the market scenario. If compared historically, the rates are still very competitive and the company expects the demand for home loans to sustain.

The firm's outstanding loan portfolio was up eight per cent year on year (YoY) to Rs 2.51 trillion at the end of March from Rs 2.32 trillion a year ago. Of this, the individual home loan portfolio expanded by 13 per cent YoY to Rs 2.04 trillion this March, from Rs 1.81 trillion a year ago.

Loan growth guidance is around 15 per cent for 2022-2023 (FY23), the company said.