HDFC raises retail prime rate on home loans by 5 basis points

Mortgage financier Housing Development and Finance Corporation (HDFC) on Sunday raised its retail prime rate (RPLR), on which its adjustable-rate home loans are benchmarked, by 5 basis points, effective May 1, 2022.

This comes after many major banks, including the State Bank of India (SBI), raised their marginal cost of funds-based lending rate (MCLR) by 5 to 10 basis points last month.

As a result, HDFC’s adjustable rate home loans for customers with a credit score above 750 will now be 6.75% from 6.70% previously.

For loans of up to Rs 30 lakh, customers would be charged an interest rate of 6.85%. Loans between Rs 30 and Rs 75 lakh will have an interest rate of 7.10, and those above Rs 75 lakh will have an interest rate of 7.20%. For customers in all segments, the interest rate is 5 basis points lower.

The adjustable rate mortgage (ARHL) is also called a floating rate loan or a variable rate loan. The interest rate of an ARHL is linked to HDFC’s reference rate, i.e. the RPLR, and any movement of HDFC’s RPLR may cause the applicable interest rates to change.

Last month, SBI increased its MCLR by 10 basis points, effective April 15, across all durations (100 basis points = 1 percentage point). The one-year MCLR was revised to 7.1%, while the two- and three-year MCLRs were increased to 7.3% and 7.4%, respectively.

The MCLR is a reference interest rate, which is the minimum rate at which banks are authorized to lend. Most loans are tied to the one-year MCLR.

In addition, Axis Bank, the third largest private sector lender in the country, and Kotak Mahindra Bank increased their MCLR by 5 basis points while Kotak Mahindra Bank increased their one-year MCLR by 5 basis points to 7.4%, from April 16. Bank of Baroda, the public sector lender, also raised its MCLR by 5 basis points, effective April 12.

The increase in lending rates comes after the Reserve Bank of India’s hawkish stance at the recently concluded monetary policy meeting last month, when it focused on tackling inflation rather than curbing inflation. growth support.

Due to the ultra-loose monetary policy stance and excess liquidity in the system over the past two years, interest rates are at historic lows with many lenders offering mortgages as well. lower than 6.5%.