HDFC Ltd has already started informing its customers of a hike in their home loan interest rates. The new rates are effective May 9, 2022. This means that both existing and new home loan customers will now pay more in equated monthly instalments (EMIs).
As reported by Economic Times, this rise means all the new and existing customers of HDFC Ltd would feel the pinch of higher EMIs.
HDFC Bank, too, recently raised its benchmark lending rate by five basis points. HDFC Bank is not the first in line to increase its home loan rates. Before this, ICICI Bank, Canara Bank, Central Bank of India, Bank of India and Punjab National Bank too had announced an increase in their home loan rates following the Reserve Bank of India’s decision to hike the policy rate to check growing inflation and propensity for a further hike in interest rates.
The recent hike implies that customers will now repay their home loans at likely interest rates in the range of 7-7.45 per cent. For loans up to ₹30 lakh, HDFC Bank would now charge a 7.1 per cent interest rate while for women borrowers, the interest rates would be limited to 7.05 per cent. The new rates for loans in the range of ₹30-75 lakh will be now 7.35 per cent (the rate would be 7.3 per cent for women borrowers).
As per India Ratings and Research, the rising deposit rates would limit the spread benefit for lenders. The impact of this hike is slated to be immediate and much more. Details suggest that the long-term loans, viz., home loans and loans against property are likely to witness a jump in EMIs. Ironically, for banks, about half of the retail loans were home loans. As banks borrow money from the RBI at the repo rate, any change in it affects the lending rate of banks. This in turn takes a direct hit on their lending businesses.