HDFC increases its lending rate by 25 basis points from tomorrow, mortgage will be more expensive

In a statement, the mortgage lender said: “HDFC is increasing its Retail Prime Rate (RPLR) on home loans, on which its Adjustable Rate Home Loans (ARHL) are benchmarked, by 25 basis points, effective August 9, 2022.”

This is the second hike this month, a previous hike of 25 basis points having been made from August 1.

This is the sixth increase undertaken by HDFC in three months. In total, the rate has been increased by 140 basis points since May 2022.

Earlier, on June 9, the nation’s largest housing finance company raised the RPLR by 50 basis points. On June 1, it raised it by 5 basis points. On May 2, it raised the rate by 5 basis points and on May 9, mortgage rates were raised by 30 basis points.

For existing customers, rates would increase by 25 basis points or (0.25%). HDFC follows a three-month cycle to reassess its loans to existing customers. Thus, the loans will be revised in synchronization with the increase in the loan rate according to the date of the first disbursement of each client.

The latest hike comes after the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) raised its repo rate by 50 basis points on Friday, the third increase in the current cycle, to cool stubbornly high inflation that is remained above its tolerance band for six consecutive months.

Financial institutions have been on an interest rate hike spree in line with RBI’s monetary tightening since May.

The RBI has raised the repo rate by a total of 140 basis points since the start of its rate hike cycle at an unscheduled meeting in May. It must meet in September as well as in December.

Analysts believe the central bank should raise its key rate by as much as 60 basis points by the end of 2022, before pausing, but the pace of rate hikes should slow.

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