HDFC (Housing Development and Finance Corporation) has announced a 25 bps hike in the retail prime lending rate (RPLR) on housing loans. The benchmark lending rate for home loans has been raised by 0.25 per cent, and the new rate will come into effect from today (August 9), HDFC said in a regulatory filing. The rate hike comes three day after the Reserve Bank of India announced 50 bps hike in repo rate in August MPC. Earlier this month, HDFC had raised the RPLR by 25 bps with effect from 1 August. Since May this year, the key lending rate has been increased six times by HDFC, and it has been cumulatively hiked by 140 bps.

“HDFC increases its retail prime lending rate (RPLR) on Housing loans, on which its adjustable rate home loans (ARHL) are benchmarked, by 25 basis points, with effect from August 9, 2022,” HDFC informed the stock exchanges. The increase in RPLR will result in costlier EMIs for home loan borrowers. The mortgage financier also announced a hike in the marginal cost of funds based lending rate (MCLR) across all loan tenures by 5-10 bps with effect from 8 August 2022.

Meanwhile, private lender HDFC Bank has also hiked its Marginal Cost of Funds Based Lending Rate (MCLR) across all tenors for borrowers by 5-10 basis points (bps) with effect from Monday. A hike in the MCLR rate implies an increase in loan interests for new and existing borrowers, including EMIs for home loans, vehicle loans and any other loan related to marginal cost. Under the revised rates, one-year MCLR has increased to 8.1per cent, while the overnight MCLR rose to 7.8 per cent, according to the information posted on the bank’s website. The one-year MCLR is considered important from a retail loans perspective, as a bank’s long-term loans like home loans are linked to this rate.

For the one-month, three-month and six-month tenor, the MCLR will be 7.80 per cent, 7.85 per cent and 7.95 per cent respectively. For 1-year, 2-year and 3-year tenors, MCLR has been hiked to 8.10per cent, 8.20per cent and 8.30 per cent respectively. Earlier this month, ICICI Bank also raised their lending rates across all tenors. Indian Bank too announced a revision in its MCLR rates effective 3 August, while Canara Bank raised its repo rate-linked lending rate by 50 bps. The country’s largest lender State Bank of India also increased MCLR on loans by 10 basis points or 0.10 per cent effective from July 15, 2022.

IDFC First Bank also revised its MCLR upwards by 5-15 bps across loan tenors, effective 8 August. Earlier this month, Punjab National Bank increased its MCLR by 10 bps across tenors, effective August 1, 2022. Financial institutions including banks, NBFCs and HFCs are expected to aggressively raise their lending rates, as the Reserve Bank of India (RBI) has been increasing repo rate since May in an effort to tame inflation. The rate hikes over the past three months have cumulatively brought repo rate to 5.4 per cent, which is the highest since August 2019.