HDFC, the country’s largest mortgage lender, on Saturday announced a hike in its retail prime lending rate (RPLR) that will make loans dearer for borrowers. “HDFC increases its RPLR on housing loans, on which its adjustable rate home loans (ARHL) are benchmarked, by 25 basis points, with effect from August 1,’’ the corporation said in a regulatory filing to stock exchanges on Saturday.
The hike comes just days ahead of a meeting of the monetary policy committee (MPC) that is expected to raise the policy repo rate by 25-50 basis points to tame inflation. After the central bank raised the policy rate on two occasions this year, HDFC increased the lending rates four times. On June 10, it raised the RPLR by 50 basis points. Before this, it had raised this rate by 5 basis points on June 1, by 30 basis points on May 9 and by 5 basis points on May 2.
The RBI had increased the repo rate by 40 basis points in an off-cycle meeting on May 18 and subsequently by 50 basis points on June 8. The repo rate, which determines interest rates on homes, cars and other loans, currently stands at 4.90 per cent. Any changes made by the MPC after its three-day meeting on August 5 will see another round of interest rate hikes from banks. According to the HDFC’s website, its RPLR currently stands at 16.95 per cent.
The interest rates for women borrowers for loans up to Rs 30 lakh stand at 7.65-8.15 per cent while it is 7.70-8.20 per cent for other borrowers. For loans above Rs 30 lakh to Rs 75 lakh it stands at 7.90- 8.40 per cent and 7.95-8.45 per cent, respectively. Observers said the increase by HDFC is not surprising considering the direction of interest rates. They added that with inflation remaining above its upper bound of 6 per cent, the RBI could continue to raise rates at least till October before taking a brief pause. However, commodity prices have cooled off in recent times leading to hope in some circles that inflation could soften and this is likely to lead to a moderation in the repo rate revisions by the central bank.
