Mortgage lender HDFC Ltd on July 30 increased its benchmark lending rate by 25 basis points, a move that will make loans dearer for both existing and new borrowers.

The rate hike comes ahead of the RBI’s Monetary Policy Committee (MPC) meeting later next week. It is widely expected that MPC would hike interest rates to tame high inflation.

"HDFC increases its Retail Prime Lending Rate (RPLR) on housing loans, on which its Adjustable Rate Home Loans (ARHL) are benchmarked, by 25 basis points (bps), with effect from August 1, 2022," the housing finance company said in a statement. This is the fifth hike effected by HDFC in two months. In all the rate has been increased by 115 basis points since May this year.

The revised rates for new borrowers range between 7.80 percent and 8.30 percent, depending on credit and loan amount. The existing range is 7.55 percent to 8.05 percent. For existing customers, the rates will rise by 25 basis points or (0.25 percent). For existing customers, the rates will rise by 25 basis points or (0.25 percent). HDFC follows a 3-month cycle for repricing its loans to existing customers. So, the loans will be revised in sync with the increased lending rate based on the date of the first disbursement of each customer.

Financial institutions are on an interest rate hike spree following the increase in repo rate by 40 basis points and 50 basis points, respectively, announced by the RBI in May and June.