HDFC raises the retail prime rate on home loans by 25 basis points from August 9

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Following the decision of the RBI’s Monetary Policy Committee (MPC) to raise the benchmark benchmark rate, mortgage lender HDFC Ltd has raised its home lending rates by 25 basis points, effective August 9, it said. the company in a late Monday evening trade notification.

This is the second rate hike the mortgage lender has announced in quick succession. Last week, it also raised its mortgage rates by 25 basis points. The mortgage lender has raised rates by 140 basis points since May this year, passing the entire rate hike made by the six-member MPC onto borrowers.

“HDFC is increasing its Retail Prime Lending Rate (RPLR) on home loans, on which its adjustable rate home loans (ARHL) are benchmarked, by 25 basis points, effective August 9, 2022,” the mortgage lender said. in a press release. .

Revised rates for new borrowers would be between 8.05% and 8.55%, depending on credit and loan amount.

HDFC has moved from resetting quarterly for individual loans to resetting monthly to reduce the impact of pass-through rate changes. Its net interest income and net interest margin were impacted in the first quarter as central bank actions on interest rates impacted the lender’s cost of borrowing without simultaneous transmission on the side of the asset.

Last week, the MPC raised the repo rate by 50 basis points to 5.4%, its third consecutive rate hike since May, due to inflationary concerns and to protect the exchange rate, which is under pressure. pressure since war broke out in Europe in February. .

The MPC has raised its repo rate by a cumulative 140 basis points since it began the process of monetary tightening to rein in inflation, which has been above the RBI’s upper tolerance limit for some time now. .

HDFC Bank, IDFC First Bank and Canara Bank have raised their marginal cost of funds-based lending rate (MCLR) in response to rate hikes undertaken by the rate-setting body. Most lenders, including ICICI Bank, RBL Bank, Bank of Baroda and Punjab National Bank, have already raised their benchmark-linked external lending rates, following the MPC’s rate hike last week.

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