Marginal cost of funds based lending rate is set by the Reserve Bank of India (RBI) as an internal benchmark rate for banks. It is useful for banks to determine the minimum interest rate on various types of loans. According to the details mentioned on the website of HDFC Bank, the overnight MCLR has been increased by 20 basis points from January 7, 2023. With this, the MCLR rate has reached 8.50 percent from 8.30 percent. Also, the MCLR for loans with a one-month term has increased from 8.30 percent to 8.55 percent. Also, three-month MCLR rose from 8.35 percent to 8.60 percent, and six-month MCLR jumped from 8.45 percent to 8.70 percent.
The one-year MCLR (to which most consumer loans are linked) has increased to 8.85 per cent from 8.60 per cent. HDFC Bank has decided to increase the two-year MCLR from 8.70 percent to 8.95 percent and the three-year MCLR from 8.80 percent to 9.05 percent.
HDFC Bank has increased the loan-based interest rate MCLR on all types of loans by 25 basis points. This will put more burden on the borrowers. Other loans including home, vehicle and personal loans will become a burden. With the increase in interest rates effective from January 7, monthly payments will see an increase in EMI. On the other hand.. other banks have also started the process to increase interest rates on repo rate based house loans. ICICI Bank, Bank of Baroda, PNB, Canara Bank have hiked interest rates in December itself.
How much will the EMI increase for a loan of Rs.30 lakhs?
Let’s say you have taken a loan of Rs.30 lakh from HDFC Bank for 20 years. Let’s take a look at how much the burden will be with the recently increased interest rates. Before January 7, the interest rate for Rs.30 lakh was 8.6 percent. Then the EMI was Rs.26,255. The bank recently increased by 25 basis points. With this, the interest rate has reached 8.85 percent. With this, the EMI will reach Rs. 26,703. An additional burden of Rs.478 per month will be incurred. Also, the EMI interest rate of Rs.797 has to be paid in addition to the loan of Rs.50 lakhs.