HDFC Bank Home loan
HDFC Bank, India’s premier private sector lender, has gradually raised its home loan interest rates linked to the repo rate since January this year. Despite the Reserve Bank of India maintaining the repo rate unchanged since April last year, these rates have been incremented. As the term suggests, interest rates linked to the repo rate should adjust proportionately to changes in the repo rate.
The increments, as depicted in the graphic, are applicable solely to newly approved loans, excluding existing ones, thereby sparing existing borrowers from any impact.
In January, the lowest interest rate on a Rs 50 lakh home loan stood at 8.35 percent, whereas presently, it stands at 8.70 percent. Hence, within three months, HDFC Bank has effectively augmented home loan rates by 35 basis points (bps). One basis point equals one-hundredth of a percentage point.
HDFC Bank has adjusted its other loan interest rates, with the revised Base Rate set at 9.25% effective from September 25, 2023. Additionally, the Benchmark PLR stands at 17.85% per annum with effect from the same date.
Monthly adjustments to the Marginal Cost of Funds-Based Lending Rate (MCLR) take into account the repo rate and other borrowing rates. It is mandatory for banks to offer loans at rates equal to or above the MCLR.
MCLR, or the Marginal Cost of Fund-Based Lending Rate, establishes the minimum interest rate a financial institution must charge for a specific loan, determining the lower threshold of loan interest rates. This rate remains fixed for borrowers unless otherwise specified by the Reserve Bank of India.
According to HDFC Bank, “The Reserve Bank of India (RBI) mandates that banks allow base rate borrowers to transition to MCLR in response to policy rate changes. However, it’s advisable to seek professional guidance before making a decision. Financial advisors can provide updated information and assist with the transfer process.”
