HDFC has raised interest rates seven times in the last five months.
Leading housing finance provider HDFC Ltd. raised its loan rate by 50 basis points on Saturday in response to the Reserve Bank of India (RBI) increasing the policy repo rate by 50 basis points (bps) to 5.9% during its Monetary Policy Committee (MPC) meeting on Friday. Over the previous five months, HDFC increased rates a total of seven times.
In a statement, the company said that as of October 1, 2022, "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."
House loans are available from HDFC Limited with interest rates starting at 8.10% p.a. This interest rate applies to all loans for new house purchases, balance transfers, home renovations, and home expansions. The above-mentioned home loans have variable interest rates that change throughout the loan and are dependent on the benchmark rate set by HDFC ("RPLR"). Both new and existing borrowers will now be required to make EMI payments that are 0.50% higher as a result of the company raising its key lending rate.
The Reserve Bank of India (RBI) increased the repo rate by 50 basis points on September 30, the fourth increase since May. The cost of funding for banks and financial institutions will soon climb due to the repo rate, and additional banks and financial institutions are expected to follow.
Meanwhile, existing and new loan borrowers would be required to pay higher equivalent monthly instalments (EMIs) for their vehicle and home loans because it will now cost banks and lending organisations more to borrow money as a result of the hike in the repo rate.
“Bank credit offtake has been higher than the deposit inflows in the current financial year. This is a sharp contrast from a year ago when borrowers were seen to be deleveraging (negative credit growth). The incremental (over March) credit growth during Aprearly September’22 has been 5.5%, while the comparable deposit growth has been 3.6%. With banks lending more than the deposit being raised, the incremental credit-deposit ratio has risen to 112% (-8% a year ago). To meet their lending requirements, banks have been resorting to borrowings (doubled from a year ago) and are likely tapping their investments (investment -deposit ratio has declined from 30.20% to 29.9%)," according to research specialists at Edelweiss Broking Limited.
(With inputs from PTI)
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