Home loans would cost more after a 25-bps lending rate increase by HDFC

1 Aug 2022 , 12:52 PM

Mortgage lender, HDFC Ltd. raised its benchmark lending rate by 25 basis points on Saturday, making loans more expensive for both current and potential consumers.

Before the Monetary Policy Committee (MPC) meeting of the RBI scheduled for next week, the rate was raised. The committee raising interest rates is generally forecasted in order to control extreme inflation.

According to a statement from the firm, “HDFC increases its Retail Prime Lending Rate (RPLR) on housing loans, on which its Adjustable-Rate Home Loans (ARHL) are benchmarked, by 25 basis points (bps), with effect from August 1, 2022.”

In the past two months, HDFC has implemented five price increases. Since May of this year, the rate has gone up 115 basis points overall.
Depending on credit and loan size, the updated rates for new borrowers vary between 7.80% and 8.30%. Currently, the range is 7.55% to 8.05%.

For current clients, rates will increase by 25 basis points or (0.25%).

For its loans to current clients, HDFC uses a three-month period. Accordingly, the loans will be updated in accordance with the elevated lending rate depending on the date of each customer’s initial disbursement.

After the RBI announced increases in the repo rate of 40 basis points and 50 basis points, respectively, in May and June, financial institutions went on an interest rate-hike binge.