Mumbai, After the RBI hiked the repo rate, one bank after another has started raising interest rates on home loans. HDFC, the country’s largest private NBFC, has also announced an increase in interest rates on home loans. Which will be applicable from 04 May 203. According to a statement from HDFC, home loan interest rates have been hiked by 0.50%.
The new rates will apply to all borrowers. An increase in interest rates will also increase the EMI of a home loan, while if the EMI remains the same, the term of the home loan will be extended.
According to HDFC, the increase in the retail prime lending rate (RPLR) of housing loans will increase the benchmark of adjustable rate home loans (ARHL) by 0.50 per cent, effective from May 4. With the new rates, HDFC’s home loan interest rates will start in the range of 8% to 7.5%.
HDFC had earlier hiked interest rates by 0.05 per cent with effect from May 1. However, the bank has recently hiked home loan rates as a result of the RBI’s sudden hike in repo rates. On May 2, the RBI had hiked the repo rate by 0.50 per cent to 8 per cent from 8 per cent.
Since then, it has been speculated that various NBFCs as well as banks will hike interest rates on home loans within a matter of days. Banks take a long time to pass on the benefits of RBI repo rate cuts to their customers, and in most cases loan interest rates are rarely reduced due to repo rate cuts.
However, in the two to four days after the repo rate hike, many banks have raised interest rates. Before HDFC, Bank of Baroda and ICICI have also raised interest rates on loans, including housing. Apart from this, the central bank and the Bank of India have also hiked interest rates by 0.50 per cent.
Banks do not need to increase your EMI with the interest rate on home loans. In most cases, the bank adjusts the loan period instead of changing the EMI. Let’s try to understand in simple language, suppose your home loan of Rs 20 lakh is still running at an interest rate of 7.5 per cent, which is for a period of 20 years.
The EMI of this loan is Rs. Now that the interest rate has gone up by 0.50 per cent to 6.15 per cent, and if its term is kept the same, you will now have to pay an EMI of Rs 12.5. On the other hand, if you want to keep the EMI unchanged, your loan term will increase by one year.