Home loan EMIs will go up for existing as well as new customers of the housing finance company.
From August 1, 2022, housing loans at private lender HDFC are becoming costlier, with the non-banking finance company announcing a rate hike of 25 basis points. Home loans interest rates at HDFC will now be offered at an interest rate ranging between 7.80% and 8.30% annual interest as against the previous range of 7.55%-8.05%.
This is the highest housing loans at HDFC have been in the past 2 years. However, rates are still lower than they were before the coronavirus pandemic.
The housing finance company’s housing loans are provided at its retail prime lending rate, which is linked with the RBI’s repo rate.
“HDFC increases its Retail Prime Lending Rate (RPLR) on Housing loans, on which its adjustable rate home loans (ARHL) are benchmarked, by 25 basis points, with effect from August 1, 2022,” India’s largest housing finance company said in a statement on July 30, 2022.
The rate hike means EMI on a Rs 1-crore housing loan with a 20 year repayment tenure going up from Rs 80,865 a month to Rs 82,404 a month. Since HDFC follows a 3-month cycle for repricing its home loans, the increase would reflect differently for individual borrowers.
Recall here that this is the fifth instance of a lending rate hike by HDFC, which has increased its home loan interest rate by a cumulative 115 basis points after the RBI started the repo rate hike cycle to tame stubbornly high inflation. In the past two months, the RBI has increased the repo rate by 90 basis points to bring it to 4.90%. Sector experts are predicting a further upwards tweaking of the repo rate in the RBI upcoming policy announcement on August 5, 2022.
A further hike in the repo rate—likely to be in the range of 30-50 basis points—will further prompt banks in India to increase home loan interest rates. Nearly all banks in the country have already increased lending rates with the start of the RBI’s rate hiking cycle, making housing loans more expensive for India’s home buyers.