The country's largest private lender ICICI Bank is all set to increase the home loan interest rate by 25 basis points to 8.5 per cent from on Wednesday.
An announcement to this effect is likely to be made shortly, banking sources said.
Under the proposed scheme, home loan seekers will have to pay 8.5 per cent in the first year, 9.5 per cent in the second year and 1.75 per cent over and above the base rate in the third year.
The base rate is the benchmark rate below which banks are not allowed to fix their lending rates.
Currently, the bank offers a rate of 8.25 per cent in the first year and 9.25 per cent in the second year.
ICICI has also upped its base rate, which is a floor for lending rates, by 25 basis points to 7.75 per cent with effect from Wednesday.
The revision in base rates follows the RBI's move to raise short-term lending (repo) and borrowing (reverse repo) rates in its September monetary review.
In order to bring in more transparency, the base rate was introduced as replacement for the Benchmark Prime Lending Rate (BPLR) from July 1 this year.
In the last few days, a number of banks have resorted to an upward revision of their base rates and interest rates.
On September 30, a number of lenders raised their base rates. Punjab National Bank hiked the minimum rate of interest on loans to 8.5 per cent from 8 per cent, while Axis Bank, Kotak Mahindra Bank and foreign lender Standard Chartered Bank raised their base rates by up to 25 basis points.
Besides, HDFC Bank and Bank of Baroda also on Tuesday raised their benchmark lending rates by up to 50 basis points.
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