Mortgage lender HDFC Ltd on Wednesday announced an increase in its benchmark lending rate by 5 basis points (bps), a move that will make loans dearer for both existing and new borrowers.
This is the third hike effected by HDFC in the last one month.
"HDFC increases its Retail Prime Lending Rate (RPLR) on housing loans, on which its Adjustable Rate Home Loans (ARHL) are benchmarked, by 5 basis points, with effect from June 1, 2022," the housing finance company said in a statement.
The revised rates for new borrowers range between 7.05 per cent and 7.50 per cent, depending on credit score and loan amount. The existing range is 7 per cent to 7.45 per cent.
For existing customers, the rates would rise by 5 basis points or (0.05 per cent). Last month, HDFC had increased its benchmark lending rate by 35 basis points making EMI for existing borrowers expensive.
HDFC follows a three-month cycle for repricing its loans to existing customers. So the loans will be revised in sync with increased lending rate based on the date of the first disbursement of each customer.
Financial institutions are on an interest rate hike spree following an increase in the repo rate and cash reserve ratio (percentage of total deposit of the banks kept with RBI) by 40 basis points and 50 basis points respectively announced by the RBI last month.
After an out-of-turn Monetary Policy Committee (MPC) meeting, the Reserve Bank last month hiked the benchmark repo rate -- the short-term lending rate it charges to banks -- by 0.40 per cent to 4.40 per cent in order to tame soaring inflation.