India’s largest home loan lender HDFC has hiked rates for existing and new home loan borrowers. A hike in the Retail Prime Lending Rate (RPLR) raises rates for existing borrowers. The rates for new borrowers have also been raised.
The RPLR has been hiked from 16.15% to 16.35%. This is its first Retail Prime Lending Rate (PLR) hike since December 2013 when it was at its peak of 16.75%. A hike in the RPLR translates into a hike for existing borrowers, in the manner described below.
Home loan rates for retail borrowers of HDFC are tied to the RPLR. The change for existing borrowers is determined by the spread between the rate at which they originally borrowed and the RPLR prevailing at that time. For example, if you took a loan at 10% and the RPLR was 16.5%, your spread is 6.5%. A hike in RPLR to 17% will push up your rate by 0.5% to to 10.5% (17% – 6.5% = 10.5%).
The bank has increased rates for loans above Rs 30 lakh by 0.2% and for loans below Rs 30 lakh by 0.05%.
The table below shows how the changes pan out for new borrowers:
|Loan Amount||Previous Rate||New Rate|
|Below 30 lakhs||8.40%||8.45%|
|30 – 75 lakhs||8.40%||8.60%|
|Above 75 lakhs||8.50%||8.70%|
Women get a discount of 0.05% on rates on all slabs.
Why is this happening?
Interest rates around the world are grinding upwards, spurred by the US Federal Reserve. In India, this factor is compounded by large-scale government borrowing which pushes up the rate on government bonds. The 10-year Government bond yield has been steadily climbing from its bottom of about 6.4% in August 2017. It currently sits at 7.33%, almost a full percentage point higher. This forces banks to also hike their lending and deposit rates. SBI, the country’s largest bank, hiked its deposit rates on 28th March 2018.
What does this mean for you?
Home Loan rates ultimately translate into EMIs. So you need to figure out exactly how much this will impact your EMIs. You can do this using our free EMI calculator.