HDFC Hikes Retail Prime Lending Rates for 3rd Time in a Month; Home Loan EMIs to Go Up

India’s largest housing finance company HDFC on Wednesday, June 1, said that it has increased its retail prime lending rate (RPLR) on housing loans by 5 basis points. The Retail Prime Lending Rate (RPLR) on Housing loans, on which its Adjustable Rate Home Loans (ARHL) are benchmarked, has been increased with effect from June 1, HDFC said in a filing with the BSE. This is the third time in a month that HDFC has hiked its home loan rates. Previously on May 2, it had hiked the same by 5 basis points and on May 9 the home loan rates were increased by 30 basis points.

“HDFC increases its Retail Prime Lending Rate (RPLR) on Housing loans, on
which its Adjustable Rate Home Loans (ARHL) are benchmarked, by 5 basis
points, with effect from June 1, 2022,” the mortgage company said in the BSE filing.

The latest HDFC Retail Prime Lending Rate hike will result in an increase of home loan EMIs for borrowers by 0.05 per cent. This comes after the Reserve Bank of India in an off cycle MPC meeting last month increased its repo rates by 40 basis points. The move also comes days before the scheduled RBI MPC meet, where the central bank is again expected to raise the rates to tame rising inflation across India.

Here are the Revised Adjustable Rate Home Loans (Effective from June 1 Onwards):

i) For loans of up to Rs 30 lakhs, female customers will be charged an interest rate of 7.05 per cent, as opposed to the 7 per cent earlier, an increase of 5 basis points. For other customers, the interest rates have been hiked by 5 basis ponts to 7.10 per cent up from 7.05 per cent rate earlier.

ii) For loans above Rs 30 lakh and below Rs 75 lakh, women borrowers will have to pay an interest at the rate of 7.35 per cent, in contrast with the earlier 7.30 per cent. This is an increase of 5 basis points as well. For other customers, the interest rates have been hiked by 30 basis points to 7.40 per cent up from 7.35 per cent rate earlier.

iii) In case of loans above Rs 75 lakh, borrowers who are women will be required to pay an interest rate of 7.45 per cent, up from the earlier 7.40 per cent — in an increase of 30 basis points. For other customers, the interest rates have been hiked by 30 basis points to 7.50 per cent up from 7.45 per cent rate earlier.

What are Retail Prime Lending Rate and Adjustable Rate Home Loans?

Retail Prime Lending Rate is the rate at which housing finance companies give loans to their customers who are most creditworthy. When lenders give out their loans to the customers, RPLR is considered the benchmark against those rates. A revision in these rates would mean a subsequent increase in EMIs.

ARHL, or Adjustable Rate Home Loan, is a loan that has a floating or variable interest rates. HDFC goes by a three-month cycle for adjusting its loan rates to existing borrowers. Therefore, the lender will reprice the loans on the basis of the date of the first disbursement for different customers.

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