In response to the Reserve Bank of India (RBI) raising the policy repo rate by 50 basis points (bps) to 5.9% during its Monetary Policy Committee (MPC) meeting on Friday, leading housing finance provider HDFC Ltd. increased its lending rate by 50 basis points on Saturday. HDFC has undertaken a total of seven rate increases during the previous five months.
“HDFC increases its Retail Prime Lending Rate (RPLR) on Housing loans, on which its Adjustable Rate Home Loans (ARHL) are benchmarked, by 50 basis points, with effect from October 1, 2022,” the company said in a statement.
HDFC Limited offers house loans with interest rates beginning at 8.10% p.a. Loans for new home purchases, balance transfers, home renovations, and home additions are all subject to this interest rate. The interest rates for the aforementioned home loans are variable throughout the loan’s life and are based on HDFC’s benchmark rate (“RPLR”). Due to the firm raising its key lending rate, both new and existing borrowers will now be forced to make EMI payments that are 0.50% higher.
The repo rate was raised by 50 basis points on September 30 by the Reserve Bank of India (RBI), marking the fourth hike since May. The repo rate will shortly increase the cost of funding for banks and financial institutions, and additional banks and financial institutions are likely to follow. Meanwhile, because it will now cost banks and lending organisations more to borrow money as a result of the increase in the repo rate, both present and new loan borrowers will be obliged to make higher equivalent monthly instalments (EMIs) for their vehicle and home loans.