MUMBAI: Just three days after the Reserve Bank of India (RBI) hiked the policy repo rate, the country's largest mortgage lender Housing Development Finance Corporation (HDFC) on Saturday announced 0.30 per cent increase in its home loans. "HDFC increases its Retail Prime Lending Rate (RPLR) on Housing loans, on which its Adjustable Rate Home Loans (ARHL) are benchmarked, by 30 basis points, with effect from May 9, 2022," HDFC said in a statement.
Financial institutions had started raising lending rates even before the increase in policy rates announced by the RBI on May 4. HDFC had hiked the Retail Prime Lending Rate by 0.05 per cent on May 2, irrespective of the loan amount.
Other lenders like State Bank of India, Axis Bank, ICICI Bank and Bank of Baroda have also increased their lending rates. On May 4, the Reserve Bank of India's Monetary Policy Committee in an unscheduled meeting decided to increase the policy repo rate by 40 basis points to 4.40 per cent with immediate effect.
This is the first increase in the policy repo rate since May 2020 marking a reversal of the RBI's monetary policy stance. The RBI had maintained status quo on key policy rates for almost two years. In response to the COVID-19 pandemic, monetary policy had shifted gears to an ultra-accommodative mode, with a large reduction of 75 basis points in the policy repo rate on March 27, 2020 followed by another reduction of 40 basis points on May 22, 2020.