Big Blow To Home Loan Borrowers! HDFC Bank Raises Lending Rates To 9.8%

The repo-linked lending rate is directly tied to the RBI repo rate, which has remained steady at 6.50 percent since April 2023.

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New Delhi: HDFC Bank, India's largest private sector lender, has announced an increase in its repo-linked home loan interest rates by 10 to 15 basis points, now ranging from 9.2 percent to 9.8 percent. This adjustment comes in the wake of the merger between HDFC Bank and HDFC, effective from July 1, 2023.

Transition To EBLR

According to information available on the bank's website, the change in interest rates is attributed to the merger, leading to a shift away from the retail prime lending rate (RPLR). ()

The bank clarified that henceforth, the applicable rate of interest will be linked to the External Benchmark Lending Rate (EBLR) instead of RPLR. ()

HDFC Bank stated, "On the day of the merger, there will be no change in the rate of interest (ROI), and any future alterations will be based on EBLR."

Repo-Linked Lending Rate And Regulatory Compliance

The repo-linked lending rate is directly tied to the Reserve Bank of India's (RBI) repo rate, which has remained steady at 6.50 percent since April 2023 due to signs of inflation moderation.

Notably, the Monetary Policy Committee initiated a series of repo rate hikes totaling 250 basis points starting from May 2022.

Understanding Basis Points

In financial terms, one basis point equals one-hundredth of a percentage point. Therefore, an increase of 10 to 15 basis points indicates a slight upward adjustment in interest rates by HDFC Bank.

Comparison With Other Banks

While HDFC Bank's repo-linked home loan rates now range from 9.2 percent to 9.8 percent, several other major private and public sector banks offer home loans at interest rates spanning from 8.7 percent to 10.05 percent.