Most of the bank’s customers would be affected only marginally. Interest rates on loans up to Rs 30 lakh have been increased by only 5bps to 8.4% from 8.35% for women borrowers. For others in this category, the rate is 8.45% as against 8.4% earlier. HDFC’s average loan size is around Rs 26 lakh.
Loans in the Rs 30-75 lakh range are now costlier by 20bps, with loans for women borrowers available at 8.55% and others at 8.6%. There is a similar hike for the Rs 75 lakh-plus category, where women can now avail of loans at 8.65% and others at 8.7%.
HDFC vice-chairman and CEO Keki Mistry said, “Bond yields are over one percentage point higher from their lowest levels last year. If you compare the yield on 10-year government securities in July with what they are now, it is almost up one per cent.”
Incidentally, HDFC’s rate hike comes around the same time as the RBI’s softer-than-expected monetary policy. Bond yields have crashed sharply in the new fiscal, raising hopes that the increase in interest rates have been stayed. “Even if we ignore the spike in rates in February and March, they are still higher than last year,” said Mistry.
Unlike HDFC, which periodically revises interest rates, banks make small incremental changes to their lending rates every month by applying a formula linked to their cost of funds. In March, SBI, ICICI Bank and PNB had hiked their marginal cost of lending rates (MCLR). Axis Bank had hiked its MCLR in January and February.
Although competition has increased in the home loan segment, HDFC has managed to maintain its market share. The mortgage company has also among the best home loan portfolio with the lowest level of NPAs at below 1%. One of the reasons for this is that nearly 70% of the bank’s portfolio consist of loans to the salaried class.
HDFC had recently raised close to Rs 13,500 crore to look at acquisitions and to pursue business opportunities in stressed real estate projects. The company is also looking to acquire a health insurance player.