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HDFC increases Retail Prime Lending Rate on housing loans by 5 bps – Moneycontrol

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Mortgage lender HDFC increased its Retail Prime Lending Rate (RPLR) on housing loans, on which its Adjustable Rate Home Loans (ARHL) are benchmarked by 5 basis points, the company said in an exchange filing on May 1.

Housing Development Finance Corporation (HDFC) had last month said its board has approved the merger of its wholly owned subsidiaries HDFC Investments Limited and HDFC Holdings Limited with HDFC Bank Limited.

A host of large banks, including State Bank of India (SBI), hiked their marginal cost of funds-based lending rate (MCLR) by 5-10 basis points last month. After the RPLR hike, HDFC’s adjustable-rate home loans for customers with a credit score of above 750 will now be 6.75 percent as against 6.7 percent earlier.

For loans of up to Rs 30 lakh, customers would be charged an interest rate of 6.85 percent. Loans ranging between Rs 30 lakh and Rs 75 lakh will have an interest rate of 7.10, and those above Rs 75 lakh will have an interest rate of 7.20 per cent. For women customers in all segments, the interest rate is 5 basis points lower, according to a report by Business Standard.

Adjustable-rate home loan (ARHL) is also known as a floating or a variable rate loan. The interest rate in an ARHL is linked to HDFC’s benchmark rate i.e, RPLR, and any movement in HDFC’s RPLR may effectuate a change in the applicable interest rates.

SBI has raised its MCLR by 10 basis points, with effect from April 15, across all tenors (100 bps = 1 percentage point). The one-year MCLR has been revised to 7.1 percent while two- and three-year MCLRs have been raised to 7.3 percent and 7.4 percent, respectively.

The MCLR is a benchmark interest rate, which is the minimum rate at which banks are allowed to lend. Most loans are linked to the one-year MCLR.

Bank, the third-largest private-sector lender in the country, and Kotak Mahindra Bank hiked their MCLR by 5 basis points. While Kotak Mahindra Bank increased its one-year MCLR to 7.4 percent, from April 16, public sector lender Bank of Baroda increased its MCLR by 5 basis points from April 12.

The increase in lending rates comes after the Reserve Bank of India’s hawkish stance in the recently concluded monetary policy meeting last month as it turned its focus to tackle inflation from supporting growth.

Due to the ultra-accommodative monetary policy stance and excess liquidity in the system for the last two years, interest rates are at an all-time low with many lenders offering mortgage loans as low as 6.5 percent.

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