In a move that will sharply increase EMIs on home loans and other personal loans, India’s largest private sector lender, HDFC Bank, is raising the lending rate by 35 basis points to over 7.5%. This precedes widespread anticipation that the Reserve Bank of India will raise interest rates sharply on June 8.
The one-year loan rate, which is tied to most consumer loans, will now be 7.85%. Similarly, the two-year loan rate will be 7.95% and the three-year rate is 8.05%.
The new rates were applied from Tuesday.
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This will increase interest rates on all personal loans by banks which depend on its marginal cost of funds.
“It is now inevitable that mortgage interest rates will finally leave the ‘sweet spot’ territory they have occupied for 2 years and enter the yellow alert zone of lower overall affordability,” said the president of the real estate company ANAROCK, Anuj Puri. said.
The RBI is expected to raise its main repo interest rate again on Wednesday to keep inflation under control. According to Indranil Pan, chief economist at Yes Bank, the RBI could give a 35 basis point increase in June, followed by 25 basis points each in August and September.
“At that time, we expect global growth to have slowed enough to depress commodity prices and thereby reassure the domestic inflation cycle as well. hit the pause button again after a 15 bps repo rate hike in December and analyze the implications of its 140 bps rate hike cycle on growth before making any further decisions,” Pan said.