HDFC has announced to increase in its lending rate by 30 basis points. This will cause the loans to be costlier to both the existing as well as new borrowers.
The new lending rates for new borrowers will remain between 7 to 7.45 and for the existing customers, they will vary between 6.7% to 7.15%. The lender has said that the rate will depend on the amount of credit amount.
This has come into effect because recently RBI which is also known as the bankers bank has increased its repo rate from 4% to 4.4%. The repo rate from RBI was remain unchanged for a long time but keeping inflation in mind RBI has to increase the repo rate by 40 basis points. (Hundred basis points is equal to 1% so 40 basis points are equal to 0.4%)
After the increase in the repo rate by RBI there has been a race between the lenders to increase the lending rate. Before HDFC, large financial institutions like ICICI Bank, Bank of Baroda, and Bank of India have also increased their lending rates.
Prior to the increase in RBI’s repo rate HDFC has already started to increase its lending rate by 5 basis points earlier this month. During an event organized by HDFC has said that “HDFC increases its Retail Prime Lending Rate (RPLR) on housing loans, on which its Adjustable Rate Home Loans (ARHL) are benchmarked, by 30 basis points, with effect from May 9, 2022,”.