Brace yourself to pay higher interest rates on your home and auto loans. The days of cheap loans are ending. Interest rates on home loans are set to rise by 50 basis points and those on auto loans by between 25 and 100 basis points.

ICICI Bank, the biggest in the private sector, has withdrawn its special fixed home loan scheme with effect from March 1. Kotak Mahindra Bank has increased home loan rates by 50 basis points. The current floating rate for ICICI Bank home loans is 8.75 per cent for up to Rs 30 lakh, 9 per cent between Rs 30 lakh and Rs 50 lakh and 9.50 per cent above Rs 50 lakh.

SBI is expected to continue with its special home and auto loan rates of 8 per cent only till March end.

On the auto loan front, almost every lender is increasing interest rates. HDFC Bank, which has the largest auto loan portfolio of over Rs 18,000 crore, will raise the rates by between 50 and 100 basis points from March 5. The rates will thus move up to 9.5 to 11.5 per cent from 9 to 10.5 per cent now. A senior official of HDFC Bank said the average rate hike would be 50 basis points, but high-value loans for premium cars would attract the steepest rise of 100 basis points.

ICICI Bank will raise auto loans rates by between 25 and 50 basis points. Kotak Mahindra Bank rates for auto loans will be up 25 basis points.

The change in the monetary stance and the 75 basis point increase in the proportion of customer money that banks have to mandatorily keep with the Reserve Bank of India as reserve will suck out Rs 36,000 crore of liquidity from the system.

“This puts pressure on rates,” said Ashish Partha-sarathy, trading head of HDFC Bank.

A senior Kotak Mahindra Bank official said, “We have been increasing deposit rates, and this has to reflect on our lending rates also. With inflation rising and credit pick-up happening, banks are bracing for costlier funds.”

S K Chakrabarti, Axis Bank executive director of retail banking, small units and agriculture, said, “We will watch the rates in the next few days and make a review thereafter.” Axis Bank had a special home loan scheme of 8 per cent which ended in January.

RBI has criticised the special home loan rates offered by banks, as they do not benefit existing borrowers. On February 27, HDFC withdrew its special home loan scheme. Now its floating rates are 8.75 per cent for loans up to Rs 30 lakh, 9 per cent for Rs 30 lakh to Rs 50 lakh, and 9.25 per cent above Rs 50 lakh.