Home loans getting costlier due to record inflation

India is suffering from record high inflation. Inflation in India soars to a record 13 - years high of 11.63 per cent for the week ended June 21, 2008.

To control inflation The Reserve Bank of India on  June 24 implemented a 0.5 per cent hike in its short term lending rate to banks and also a 0.5 per cent hike in cash reserve ratio.

The leader in private sector banks "ICICI Bank "had increased home loans rate by 0.75 per cent. HDFC the another large private sector player also increased its home loans rate by 0.75 per cent.

Now India's largest bank "State Bank of India" has increased its floating home loan rate by 0.5 per cent. The hike in interest rate is with effect from June 27, 2008. Previously the interest rate was 10.50 per cent and the new rate w.e.f  June 27, 2008 is 11 per cent.

State Bank of India has however left fixed interest rate on home loan unchanged. The fixed interest rate is at 12.75 per cent.

Many more banks are going to revise their rates and will hike it further. With inflation not comming in control the housing loan rates will rise even further.

This huge rise is a great burden on a comman man's budget. Many families looking to acquire a new house or their first house will have a lot of trouble in financing their house and will have to wait further for the rates to cool .

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