HDFC home loan rates Raises by 50 basis points

The existing home loan customers of mortgage major Housing Development Finance Company (HDFC) should prepare themselves to pay higher EMIs. Citing the rising interest rate scenario in the economy, the company on Tuesday said it has increased the rate of interest on floating rate home loans by 50 basis points (100 basis points=1%).

The hike comes a week after the Reserve Bank unexpectedly raised key policy rates by as much as 50 basis points.
The last time HDFC had raised rates was in May, but had kept its rates unchanged in June when the RBI had raised the key rates by 25 basis points. Click to Apply for HDFC Home Loan

As a result of this hike in rates by HDFC, home loan customer who has taken a 20-year loan will have to pay roughly about Rs 34 higher as EMI for every Rs 1 lakh of loan. Similarly, for a 15-year loan, the per lakh increase in EMI will be Rs 32, Rs 30 for a 10-year loan and Rs 28 for a 5-year loan. The rise in home loan rates will affect the existing as well as new borrowers under the floating rate options, while existing borrowers under the fixed rate will not be impacted .

For HDFC’s customers, the change in rates will be effective in a staggered manner, between now and October 1, a company official said. Under the increased rate structure, for new customers, HDFC will charge 10.75% yearly rate of interest on home loans of up to Rs 30 lakh, 11% on loans of above Rs 30 lakh and up to Rs 75 lakh, and 11.50% for loans of above Rs 75 lakh.

The central bank has hiked key policy rates 11 times since March 2010 to tame rising inflation. To keep pace with the higher cost of funds in the market, banks and home finance companies too have raised interest rates for their borrowers .

Subsequently, the interest rate under the Marginal Standing Facility, an additional borrowing window, has gone up to 9% from the earlier level of 8.5 %.

A slew of lenders including Yes bank, Bank of India, Central Bank of India , Dhanlaxmi Bank, Kotak Mahindra Bank and others have raised their lending rates in the past week since the RBI announcement . Banks are a large source of funds for the housing finance companies (HFCs) and an increase in their lending rate would push up the cost of funds for the HFCs. Among the larger banks, SBI and ICICI Bank are yet to take a decision on their lending rates.

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