Housing Development Finance Corporation (HDFC), the country’s largest mortgage lender, raised its benchmark lending rate by 25 basis points, effective August 9, 2022, the company said in an exchange filing.

“HDFC will increase the Retail Prime Lending Rate (RPLR) for its home loans by 25 basis points, based on the Adjustable-Rate Home Loan (ARHL), effective August 9, 2022,” the exchange filing said.

For existing customers, the rate will increase by 25 basis points or (0.25%). HDFC follows a three-month cycle to reprice existing customer loans. Therefore, the loan will be revised according to the increased loan interest rate based on each customer’s first payment date.

Last week, HDFC raised its benchmark lending rate by 25 basis points, “HDFC increased the retail prime lending rate on its benchmark adjustable-rate home loans by 25 basis points (bps) from August 1.”

Since May, financial institutions have been raising interest rates frantically to match the Reserve Bank of India’s monetary tightening.

This is the sixth-rate hike by HDFC in two months. The rate has risen 140 basis points since May of this year.
The rate hike comes after the Reserve Bank (RBI) raised its key rate by 50 basis points to 5.40% – the third in a row since May. With the latest rate hike, the repo rate, or short-term lending rate, for bank borrowing has surpassed the pre-pandemic level of 5.15%.

Reserve Bank of India Governor Shaktikanta Das also said that rate hikes are not the end of the tightening rate regime. More may be done to moderate inflation, which has remained above the 6% tolerance ceiling for six consecutive months.