HDFC hikes home loan rates.

HDFC, the country’s largest mortgage financer, has increased its lending rate, following in the footsteps of other lenders such as ICICI Bank, State Bank Of India (SBI)& Punjab National Bank (PNB) .  The HDFC rate hike is effective immediately. “HDFC has increased its retail prime lending rate (RPLR), on which its adjustable rate home loans are benchmarked, by 10 basis points(100 basis points, or bps =1 percent point), with effect from 1st October , 2018,” The HDFC said in a statement to the Bombay Stock Exchange (BSE) . The HDFC move comes in wake of an overall increase in the interest rate in the financial system.

Following the Hike, the corporation’s home loan rates start from 8.80% on loans up of up to Rs 30 lakh and Rs 75 lakh, it is 8.95%, and 9% pnn loans above Rs 75 lakh. In a borrowing where a woman is not a part of the loan agreement, the rates are 50 bps( basis points) higher.

The Move comes exactly five days ahead of the Reserve Bank of India’s monetary policy; 5th October 2018.

As mentioned earlier, the recent hike by HDFC comes after a lot of banks decided to increase their lending rate ahead of the RBI’s meet. There were strong chances that the Monetary Policy Committee (MPC) will hike interest rates again this month.

It is to be notified that the top banks have already implemented two back to back rate hikes- for the first time in almost 5 years- during the August meet. The RBI which will review the rates again which may go along with another hike considering the inflationary tone arising from increased fuel costs and instability of the rupee. RBI’s MPC may hike 25bps on Friday for the third time this year .

On Saturday(29th September), Punjab National Bank had increased its benchmark lending rates (marginal cost of funds-based lending rate, or MCLR) for short-term loans by up to 0.2 per cent, effective Monday. With the revision, PNB’s overnight MCLR now stands at 8.2 per cent as against 7.9 per cent earlier.

Last month, SBI and ICICI Bank increased their benchmark rates against which all home loans are priced. While SBI announced a uniform increase of 20 bps on all its MCLRs, ICICI Bank raised its benchmark rates by 15 bps.

But in the Reserve Bank of India’s Forth Bi-monetary Policy Press Conference, the Monetary Policy Committee by a 4 to 2 vote, decided to keep the policy repo rate unchanged and it changed the stance from neutral to calibrated tightening.

Due to this decision it is expected for the banks to re-consider their home loan basis points.

  • Jui Mathuria

One thought on “HDFC hikes home loan rates.

  1. Jui thanks for bringing it to us in a nutshell but what I don’t understand is why do these loan rates keep fluctuating
    What do they achieve by these fluctuations


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