Banks have increased their lending rate after the RBI increased its repo rate last month. With the RBI increasing the repo rate again, the banks are going to increase lending rate again. The RBI has increased the standing deposit facility and marginal standing facility rate by half percent. As a result, these have been revised upwards to 4.65 per cent and 5.15 per cent.
Meanwhile, the HDFC bank, the largest of the private banks, revised its lending rate by 0.35 per cent. The HDFC bank took a decision to revise the lending rate one day before the RBI revising the repo rate for the second time in a month. The total increase of lending rate by the HDFC crossed 0.60 per cent. The MCLR interest rate has now reached 7.85 per cent from the previous 7.50 per cent.
Higher home loan rates
On expected lines, RBI hikes repo rate by a further 50 bps to 4.9% while continuing to move away from its accommodative stance. The hovering inflationary concerns amidst the resilient domestic economy supports this RBI’s aggressive move. Despite the challenging global environment, the Indian economy is strongly placed and on the path to recovery and GDP growth is pegged at 7.2% for FY 2022-23. On a cumulative basis, this translates into an almost percentage point increase in repo rate in the last 1 month. However, it remains lower than the pre-pandemic level of 5.15%. We expect banks to gradually pass on this rise in the form of higher home loan rates in the coming months. An opportune time for homebuyers to take advantage of the prevailing home loan rates at a time when prices are also expected to rise in most of the markets led by revival in demand. – Ramesh Nair, CEO, India and MD, Colliers Asia.
RBI decision is expected
RBI decision to hike the policy rates is on the expected lines. With inflation lingering obstinately high, RBI had little choice. We hope the hike in repo rate would rein in rising commodity prices and ensure sustainable growth in the long term. At the same time, we don’t see any major impact of the demand side in the housing market, which continues to remain strong. We are hopeful with the supply side measures taken by the government, inflation will cool down by the year-end, and the central bank will revert to a lower interest rate regime. – Amit Goyal, CEO, Sotheby’s International Realty India
Increase is not a surprise
RBI decision to increase the policy rates by 50bps is not a surprise, infect we expect few more hikes to put check on inflation. The hike in policy rates will result in increasing the cost of borrowings and it may hit the cost of construction by 5 to 7 percent. We don’t expect a big impact on housing demand as of now.- Saransh Trehan, Managing Director, Trehan Group
