In June, RBI also increased the repo rate by 25 basis points to 8% from 7.75%.These hikes in CRR and repo increased funding costs in the medium and long term and thus the lending rates that are linked to the cost of funding were raised.

The home loan rates for HDFC were priced at a minimum of 11.75% while the fixed rates charges remained at 14% per annum. Public sector, Canara Bank offered floating rate home loans in the band of 10-10.75%.

The RBI's action of June 24 left banks with no option but to raise their lending rates due to heavy pressure on their margins, particularly in the first quarter of the fiscal year 2008-09.

While it was rather difficult to exactly predict the future scenario owing to volatility all round, one could notice a cyclical trend in the home loan rate movement. A small reduction by some players need not be a forerunner to universal changes. Similarly, a rise of 25-50 basis points may not herald a general rise.

The Present

Currently, the floating rate interest rates for the major private banks range from 11.75% to 12. 25%. While the fixed rate home loans are revolving around 14%. Similarly the home loans provided by the PSU banks are ranging between 10.5% and 11% floating rates. Banks have stopped extending credit in fixed rates due to the current slowdown in the economy. In its coming mid-term credit policy review, RBI decides to keep its current CRR and repo rate untouched that would hold the interest rates for sometime.

Home loans have seen huge fluctuations in this period of just 2 years and the future scenario is yet to unveil. If the country's central bank doesn't change its current CRR and repo rate, home loan rates may stabilize in short run but the long-run picture is still unpredictable.