On July 29th, the Reserve Bank of India (RBI) announced it was increasing its key interest rates in a move to tackle inflation and reduce it to levels approaching 7 per cent, by March 2009.
Since April, the RBI has increased the repo rate by 125 basis points and the cash reserve ratio by 150 basis points. The bank has raised its key repo rate, the rate at which it lends money to other banks, by 50 basis points to 9 per cent.
In response, India’s Housing Development Finance Corp. (HDFC) said it has raised its retail prime lending rate (RPLR), on which its adjustable rate home loans (ARHL) are benchmarked by 0.75 per cent from 1st August 2008.
The housing finance company said that for new home loan customers, the ARHL loans will now be priced at 11.75 per cent per annum, while the fixed rates will be at 14.00 per cent per annum.