
HDFC Bank, India's largest private sector lender, has hiked its repo-linked home loan interest rates by 10-15 basis points and brought them in the range from 8.70 per cent to 9.8 per cent. The bank on its website clarified that the change in the home loan rate is due to the merger of HDFC Bank and HDFC on July 1, 2023, and it will no longer be linked to the retail prime lending rate (RPLR).
"The applicable rate of interest to your account shall now be linked to EBLR (External Benchmark Lending Rate) instead of Retail Prime Lending Rate (RPLR). This is in compliance with the regulatory guidelines on floating rate of interest. On the day of the merger there will be no change in ROI and any changes in future will be based on EBLR," the bank mentioned this in the FAQs. The bank has clarified that the new repo linked interest rate is applicable to new customers. The old customers can continue with the RPLR.
The External Benchmark Lending Rate is linked to the RBI repo rate. Repo rate, which stands for repurchase agreement or repurchasing option, can be defined as the interest rate at which the central bank of a country lends money to commercial banks. The current Repo Rate is 6.50%.
The RBI's six-member Monetary Policy Committee (MPC) will meet from April 3 to April 5, which will be first meeting of the new fiscal FY2024-25.
Loan slab rate calculation
1. Special Home Loan Rates for Salaried & Self Employed
Loans payable = Policy Repo Rate + 2.20% to 2.80% = 8.70% to 9.30%
2. Standard Home Loan Rates for Salaried & Self Employed
Loans payable = Policy Repo Rate + 2.55% to 3.30% = 9.05% to 9.80%
Eligibility Criteria for Home Loans
Individuals can avail home loan based on their income and repayment capacity.
Age: 21 years to 65 years
Minimum Income for Salaried Individuals: Rs 10,000 p.m.
Minimum Income for Self-Employed Individuals: Rs 2 lakh p.a.
Maximum amount that can be borrowed
“The maximum amount you can borrow for a home loan depends on various factors, including your income, creditworthiness, and the policies of the lending institution. Generally, lenders consider your repayment capacity, which is assessed based on your income, existing financial commitments, and credit history and regulatory guidelines. The loan-to-value (LTV) ratio, which represents the percentage of the property's value that can be financed, also plays a crucial role. Lenders typically offer up to 80-90% of the property's value as a home loan,” the HDFC website states.
Other banks
The current home loan interest rates provided by ICICI Bank range between 9 per cent and 10.05 per cent. The State Bank of India home loan rates range from 9.15 per cent up to a maximum of 10.05 per cent.
On the other hand, Axis Bank provides comparatively lower interest rates for its customers ranging from 8.75 to 9.65 per cent on home loans, whereas Kotak Mahindra Bank opens with a competitive starting rate at just 8.70 per cent for its housing loan offerings.