Interest Rate Hike: Higher EMIs for Bank Loan Borrowers

HDFC Bank hikes loan costs: Taking a loan from this well-known BANK has become expensive because the bank has increased the loan interest rates (HDFC Bank Loan Rates). The hike is for varying periods of time up to 15 basis points i.e. 0.15 percent. According to the HDFC Bank website, these new interest rates are effective from 7 August 2023.

Taking a loan from HDFC BANK has become expensive because the bank has increased the loan interest rates (HDFC Bank Loan Rates). The hike is for varying periods of time up to 15 basis points i.e. 0.15 percent. According to HDFC BANK website these new interest rates are effective from 7th August 2023. That is, now anyone who takes a loan from a bank will have to pay more interest and because of that he will also have to pay more EMI.

What Are the New Rates?

The bank’s overnight MCLR has been increased by 10 basis points. After this increase, the interest rate has increased from 8.25 percent to 8.35 percent. The one-month MCLR has been hiked by 15 basis points, taking the interest rate to 8.45 percent from 8.30 percent earlier. If we talk about 3-month MCLR, it has increased by around 10 basis points, after which the interest rate has increased from 8.60 percent to 8.70 percent.

The bank has increased the 6-month MCLR by 5 basis points, taking the interest rate to 8.95 percent. Earlier this interest rate was 8.90 percent. The MCLR for one-year tenure is currently 9.10 percent, as against 9.05 percent earlier. Bank interest rate for two years is 9.15 percent and interest rate for three years is 9.20 percent.

What is MCLR?

MCLR (Marginal cost of funds based lending rate) is the minimum interest rate below which no bank can lend to customers. Banks have increased the rate every month. Banks are currently required to disclose MCLR of one month, three months, six months, one year and two years. Increasing the MCLR means that the interest rates on loans related to marginal costs like home loans, vehicle loans will increase. HDFC’s rate hike will make interest rates on EMIs more expensive for new and old customers, leading to an increase in EMIs. This increase applies to floating interest rates and fixed interest rates. Also, after the MACLR increases, the EMI will increase only on the reset date.

Summary

HDFC Bank has raised its loan interest rates by up to 0.15 percent, effective from 7th August 2023. The Marginal Cost of Funds Based Lending Rate (MCLR) has been increased across different timeframes, resulting in higher interest rates for various loans, including home and vehicle loans. As a consequence, both new and existing borrowers will have to pay higher Equated Monthly Installments (EMIs). This increase applies to both floating and fixed interest rates, and the EMIs will rise on the reset date following the MCLR adjustment.