[ecis2016.org] With the hike, repo-rate linked home loans at the housing finance company would now be priced at an interest ranging 8.05% to 8.55%.
India’s largest housing finance company HDFC has increased its retail prime lending rates by 25 basis points, with effect from august 9, 2022. The Mumbai-based bank made this announcement in a late night move on august 8, 2022.
With the hike, repo-rate linked home loans at the housing finance company would now be priced at an interest ranging 8.05% to 8.55%, depending on a borrower’s credit score and loan amount.
“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, with effect from August 9, 2022,” HDFC said in a late night exchange notification on August 8, 2022.
This is the sixth hike in rates by the mortgage lender in the past three month and the second increase in August. On August 1, too, HDFC has announced a rate appreciation of 25 basis points. Since May 2022, HDFC home loan interest rates have risen by a cumulative 140 basis points.
A 100 basis point is equal to one percentage point.
After the RBI started a repo rate-hike cycle in May this year, effectuating a 140 basis point increase in the benchmark lending rate to ultimately bring it to 5.40% in a policy announcement on August 5, 2022, nearly all banks in India have announced rate hikes, in a move that would increase the cost of property acquisition for a homebuyer. ICICI Bank, Punjab National Bank, Canara Bank and Bank of Baroda are some of the banks that hiked lending rates immediately after the repo rate hike on August 5, 2022.
The rate hike would impact new as well as existing borrowers at HDFC. Since HDFC has moved from a quarterly rate reset for individual loans to a monthly reset, the impact of the rate hike would be felt much sooner than before for existing customers. In fact, HDFC has already passed on the entire rate hike burden of 140 basis points by the RBI to its customers.
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