The change will benefit all existing HDFC retail home loan and non-home loan clients, it said. New rates will now range between 7.65-7.95 per cent for existing salaried home loan clients. Rates across the banking system have headed south in the last few months, as the Reserve Bank of India (i.e. RBI) and the govt work in tandem to propel the slowing economy. The RBI cut the policy rate by around 40 basis points last month to a historical low of around 4 per cent to spur growth amid the coronavirus crisis.
The mortgage lender Housing Development Finance Corporation (HDFC) on Friday announced to cut its retail prime lending rate (i.e. RPLR) by 20 basis points (i.e. bps) for existing customers, that in turn will reduce home loan rates for salaried customers till 7.65%. After the reduction, the HDFC’s benchmark rate RPLR stands at around 16.2%.
“HDFC reduces its retail prime lending rate (RPLR) on housing and non-housing loans, on which its adjustable-rate home loans (ARHL) are benchmarked, by 20 bps,” the lender said in a release. The reduction in the rates is effective from Friday. The reduced rate will benefit to all existing HDFC retail home loan and also non-home loan clients, the lender said. Although loan products are linked to RPLR, the spread is different for different customers. The home loan rate for the existing salaried clients is priced at around 8.55% below RPLR. Therefore, the effective rate for salaried home loan customers will begin from 7.65% after the rate cut from the lender. The move comes after the largest mortgage lender State bank of India (SBI) reduced its benchmark marginal cost of funds based lending rate (MCLR) by 25 bps across all tenors. SBI’s one-year MCLR, against that home loans, is typically benchmarked, now stands at 7% per annum.
Reserve Bank of India (i.e. RBI) had announced 40 bps cut in the key repo rate on May 22. The central bank has been reduced the repo rate by around 115 bps from March 2020 till now.