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    HDFC Bank hikes marginal cost-based lending rate by 35 bps across loan tenures

    HDFC Bank hikes marginal cost-based lending rate by 35 bps across loan tenures

    HDFC Bank hikes marginal cost-based lending rate by 35 bps across loan tenures
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    By CNBCTV18.com  IST (Updated)


    For the second time in a week, HDFC has hiked its lending rate for borrowers by 35 basis points (bps) early Tuesday.

    Mortgage financier Housing Development and Finance Corporation (HDFC) hiked its Marginal Cost of Funds Based Lending Rate (MCLR) across all tenors for borrowers by 35 basis points (bps) early Tuesday. This is the second hike in a week. One basis point is one-hundredth of a percentage point.
    MCLR is the lowest interest rate that a bank can offer for loans taken before October 2019. A hike in the MCLR rate implies an increase in loan interests for new and existing borrowers, including equated monthly instalments (EMIs) for home loans, vehicle loans and any other loan related to marginal cost.
    On June 1, the Retail Prime Lending Rate (RPLR) on housing loans, the reference gauge for home loans to borrowers, was increased by 5 basis points. On May 7, the bank had increased its MCLR rates by 25 bps.
    Tenor-wise MCLR effective June 7, 2022, as compared to May 7 hike:
    • Overnight | Old rate — 7.15 per cent; New rate — 7.50 per cent
    • One month | Old rate — 7.20 per cent; New rate — 7.55 per cent
    • Three months | Old rate — 7.25 per cent; New rate — 7.60 per cent
    • Six months | Old rate — 7.35 per cent; New rate 7.70 per cent
    • One year | Old rate — 7.50 per cent; New rate 7.85 per cent
    • Two years | Old rate — 7.60 per cent; New rate 7.95 per cent
    • Three years | Old rate — 7.70 per cent; New rate 8.05 per cent
    • HDFC and other financial institutions are regularly increasing interest rates following an increase in the repo rate and cash reserve ratio (percentage of total deposit of the banks kept with the Reserve Bank of India (RBI) ) by 40 basis points and 50 basis points, respectively, last month.
      At an out-of-turn Monetary Policy Committee (MPC) meeting, the RBI hiked the benchmark repo rate, the short-term lending rate it charges to banks, by 0.40 percent to 4.40 per cent in order to tame soaring inflation.
      Speaking to CNBC-TV18 on May 23, RBI Governor Shaktikanta Das said: “RBI would like to raise the rates in the next few meetings or the next meeting at least."
      "I have said that one of the reasons for the off-cycle meeting in May, was that we did not want a much stronger action in June, which is highly avoidable...The expectation of rate hike is a no brainer, there will be some increase in the repo rates, but by how much I will not be able to tell now," Das had said last month.
      Besides, a recent CNBCTV-18 poll showed that the majority of 10 economists surveyed see half a percentage point hike in the repo rate in June. In the survey, half of the respondents expect a 50 basis points hike in the repo rate in the June 8 policy, and the other half expect an increase of anywhere between 25 and 50 basis points.
      This comes as the Monetary Policy Committee of the RBI is expected to announce its policy decision at 10 am on June 8. Another 40 bps hike in the repo rate is expected following the June 2022 policy meeting.
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