HSBC hikes home loan rates

Taking into account the volatile interest rate movement, foreign player HSBC has decided to increase its retail referral floating lending rates by 50 basis point from 10.5% to 11% with effective from October 6. The move will increase the home loan rates for the existing customers of HSBC. Including the immediate rate hike, bank has increased the home loan rates by 150 basis points since April 2006, reports Financial Express.

 "A customer might get home loan at 9.50%-9.75% after the rate change coming in to picture as against the 9%-9.25%," said Nicholas Winsor, head personal finance services (India), HSBC, at the sidelines of a press conference. Further, he stated, the decision to raise rates was taken almost a month back and bank has conveyed it to their customers.

Winsor also said rising wholesale interbank rates have prompted the bank to raise its retail lending rates. Retail assets contribute about 55% of the total assets and home loans contribute about two-third of the retail book, he added. On the fixed lending rates, HSBC would maintain 11% referral fixed lending rates. He also said in the past 12 months, bank is noticing a fall in the home loan demand, while the personal loan demand has picked up.

Speaking on the banks growth areas, Naina Lal Kidwai, country head, HSBC India, said, "We expect two business segments to contribute to our overall growth and those are personal finance and lending to small and medium enterprise." The bank has been investing in technology and people and in the initial investment they have invested about $1 million.

"The buoyancy in the economy and credit growth continuing in the busy season will lead pressure on the liquidity. However if this would boil down to rise in interest rates is to be seen. Policies have become less of surprising now," she added.

Naina Lal Kidwai, country head, HSBC India, while responding to a question of her resigning from the Nestle global board, said, "I have no comments to offer. Whatever we will do will be as per RBI directives."