HDFC hikes lending rate by 25 bps, home loans to get costlier

Business Tuesday 09/August/2022 10:55 AM
HDFC hikes lending rate by 25 bps, home loans to get costlier

New Delhi: Housing finance company HDFC has increased its retail prime lending rate on housing loans by 25 basis points, it said in a regulatory filing to the exchanges late on Monday night.

The revision in interest rates would come into effect from today - Tuesday. This development came close on the heels of the monetary policy committee of the Reserve Bank of India's move to raise the repo rate by 50 basis points to 5.40 per cent in order to contain the persistently high inflation.

The hike took the repo rate above pre-pandemic levels of 5.15 per cent. Raising interest typically suppresses demand in the economy, thereby helping inflation to decline.

Separately, the housing finance company last week announced the completion of the USD 1.1 billion syndicated social loan facility for the financing of affordable housing in India.

A syndicated loan is typically a substantial loan provided to a large borrower by several lenders together.

This transaction, the lender said, marked several meaningful milestones, including India's largest social financing issuance, the largest social loan globally, the first social external commercial borrowing loan out of India and the largest ECB loan deal from a housing finance company/ private NBFC in India.

Proceeds from the social loan would go towards financing affordable housing loans, the lender had said in a statement.

"Affordable housing is a critical component of quality infrastructure as also a growth driver for the real estate industry and the economy at large given its strong linkages to nearly 300 industries," said Deepak Parekh, Chairman, HDFC.

It also contributes to capital formation, employment, and income opportunities.

"A boost to affordable housing will play a significant role towards the 'Housing for All' objective of the government. The aspiration to own a home is inherent in every household."

"In India, housing will play an important role as a catalyst for growth with increased demand for affordable housing. Combined with India's growth prospects, I have never been as optimistic about the affordable housing sector as I am today," Parekh added.