HDFC Bank has recently hiked its loan interest rates, resulting in increased expenses for borrowers.
The bank has raised these rates across various time periods, with a maximum increase of 15 basis points (0.15 percent).
The new rates came into effect on August 7, 2023. As a result, those taking loans from the bank will now face higher interest charges, leading to higher Equated Monthly Installments (EMIs).
Revised Interest Rates
Overnight MCLR increased by 10 basis points to 8.35 percent from 8.25 percent.
One-month MCLR raised by 15 basis points to 8.45 percent from 8.30 percent.
Three-month MCLR raised by around 10 basis points to 8.70 percent from 8.60 percent.
Six-month MCLR increased by 5 basis points to 8.95 percent from 8.90 percent.
One-year MCLR now stands at 9.10 percent from the earlier 9.05 percent.
No change in MCLR for periods exceeding one year.
Two-year fixed interest rate set at 9.15 percent and three-year rate at 9.20 percent.
Understanding MCLR and Its Impact
MCLR, which stands for Marginal Cost of Funds Based Lending Rate, is the lowest interest rate at which banks can lend to customers.
Banks must declare MCLR values for various timeframes monthly.
An increase in MCLR translates to higher interest rates on loans tied to marginal cost, such as home and vehicle loans.
This recent hike by HDFC will cause both new and existing customers to face pricier EMIs, as the increase applies to floating interest rates, not fixed ones.
Additionally, the EMI increase will only take effect on reset dates following the MCLR increase.
