HDFC, ICICI Bank and Punjab National Bank (PNB) have raised the interest rates on home loans, thereby increasing the equated monthly instalments (EMIs) on existing and new home loan borrowers.
HDFC, which is India’s largest housing finance company, has increased its retail prime lending rate (RPLR) on housing loans by 5 basis points. Elsewhere, the state-owned PNB, has raised its lending rate by 15 basis points. The new rates are effective from June 1, 2022.
Many banks and housing finance companies, such as the State Bank of India, Bank of Baroda, ICICI Bank and others have hiked their lending rates in the wake of the Reserve Bank of India (RBI) announcing a 40 basis points (bps) hike in repo rate from 4 per cent to 4.4 per cent earlier this May.
The repo rate is the rate at which the RBI lends money to all commercial banks. An increase in repo rate translates into a hike in the lending as well as deposit rates. One bps equals 0.01 percentage point.
PNB has now revised its one-year marginal cost of lending rate (MCLR) to 7.40 per cent from the previous rate of 7.25 per cent.
HDFC has increased the home loan lending rates in different slabs. Loans up to Rs 30 lakh will have an interest rate of 7.15 per cent, while loans above Rs 30 lakh and up to Rs 75 lakh will have an interest rate of 7.40 per cent, and loans above Rs 75 lakhs will carry an interest rate of 7.50 per cent, according to a report in Business Standard. Women borrowers will receive a benefit of 5 basis points lower, the report said.
According to the report, ICICI Bank has increased its MCLR by 30 basis points. Previously, the bank had raised its external lending rate by 40 basis points to 8.10 per cent.
Typically, the hike in lending rates also leads to a hike in deposit rates. Days after the RBI had hiked the repo rate, banks had subsequently hiked the lending rates and then hiked the deposit rates as well. It is expected that banks could hike the deposit rates after this recent spate of hike in lending rates.