Home loan rates are all set to march northwards for those planning to avail bank loan for a second house. Banks are considering higher charges for those seeking loans for a second home or above the Rs 15 to 20-lakh limit.

Following a series of measures by the Reserve Bank of India to reduce credit flows to sensitive sectors such as realty, stock markets and consumer durables, India’s largest private sector lender, ICICI Bank, is considering charging more for loans for second homes.

“Applications for second homes get filtered and we also charge higher margins of around 25-35 per cent for such loans,” senior general manager Rajeev Sabharwal said. The bank is already discouraging second home buyers with credit norms being tighter for this category.

According to Sabharwal, there were two options that could be considered: one was charging more for second home loans while the other was charging less for loans below Rs 15 lakh. Presently, ICICI Bank charges 12 per cent for home loans of Rs 15 lakh.

Asked whether the move to impose higher charges on second home loans was prompted by the RBI’s directive to reduce credit flows to the realty sector, Sabharwal said, “The market has already slowed down. “Our objective is not to curtail growth but only to look at priority sector and loans of lower value and see how they could be made more affordable.”

The Reserve Bank had recently imposed higher provisioning and risk weights for credit to certain sectors, among them realty, in a bid to prevent what it called “overheating”.

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