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HDFC Hikes Interest Rates for Home Loan After 2013

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HDFC Hikes Interest Rates for Home Loan After 2013: HDFC is one of the largest housing finance company in India. After the very long time since 2013, HDFC has increased home loan interest rates for loans above Rs. 30 lakhs have been raised by up to 20 basis points and for loans those below Rs. 30 lakhs, which include priority sector loans, have been increased by 5 basis points (100bps = 1 percentage point). After this increase, the cost of HDFC Home Loans between Rs. 30 lakhs and Rs. 75 lakhs has been raised to 8.60% from 8.40%. Loans above Rs. 75 lakhs will cost 8.70%, up from 8.50%. Loans up to Rs. 30 lakhs would now cost 8.45%, up from 8.40%. Women borrowers will get a 5 basis point reduction for all the above slabs.

Vice Chairman and CEO of HDFC Keki Mistry said, “Bond yields are over one percentage point higher from their lowest levels last year. If you compare the yield on 10-year government securities in July with what they are now, it is almost up one percent”.  Keki Mistry also said, “This hike in Prime Lending Rate (PLR) will help us maintain our margins in the 2.20% to 2.35% range, which has been our historic average for more than 10 years”.

There are various banks like State Bank of India (SBI), ICICI Bank, Punjab National Bank (PNB) etc, which periodically revises their interest rates. These banks make small incremental changes to their lending rates every month by applying a formula linked to their cost of funds. In March, State Bank of India, ICICI Bank, and PNB had hiked their Marginal Cost of Lending Rates (MCLR) and Axis Bank had hiked its MCLR in January and February.

Although competition has increased in the home loan market, HDFC has managed to maintain its market share. The mortgage company has also among the best home loan portfolio with the lowest level of NPAs at below 1%. One of the reasons for this is that nearly 70% of the bank’s portfolio consists of loans to the customers who belong to the salaried class.

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