Home loan borrowers are bracing for more increases in their monthly outgo on their mortgages as lenders follow the Reserve
Bank of India’s (RBI) cue and increase interest rates at the fastest pace in at least a decade.
On Saturday, Housing Development Finance Corp (HDFC NSE 0.44 %), India’s largest mortgage financier, hiked its benchmark retail prime lending rate (RPLR) for the fifth time this fiscal ahead of the RBI’s monetary policy meeting scheduled on August 5.
HDFC hiked its RPLR by 25 basis points, taking its minimum lending rate to 7.80% up from 7.55% before the hike. One basis point is 0.01 percentage point.
The hike means equated monthly instalments (EMI) on say a ₹50 lakh loan for a 20-year tenure, will now increase to ₹41,202 per month at 7.80% up from ₹40,433 per month at 7.55% before the hike.
In all, HDFC has increased its lending rate by 115 bps since May. India’s largest lender has increased rates twice in May and June before the latest hike.
Analysts said the latest hike by HDFC is pre-emptive as the central bank is expected to hike the benchmark repo rate, the rate at which banks borrow funds from it, by at least 25 basis points this week.
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