After Diwali, HDFC Bank, the largest private sector bank in India, has raised its Marginal Cost of Funds-based Lending Rate (MCLR) for certain loan tenures.
This increase means that if you’re planning to buy a car or house, your loan will now come with a higher interest rate, leading to higher Equated Monthly Installments (EMIs).
Existing loan holders will also see their EMIs rise due to this adjustment. The MCLR has been increased by 0.05%, effective from November 7, 2024.
Impact on EMIs and Loan Interest Rates
The revision in HDFC Bank’s MCLR affects the EMI for all floating-rate loans, including home loans, personal loans, and auto loans.
With this change, both new and existing customers will experience higher loan interest rates. The revised MCLR is between 9.15% and 9.50%, with specific changes as follows:
Overnight MCLR: Increased from 9.10% to 9.15%
One-month MCLR: Increased from 9.15% to 9.20%
Three-month MCLR: Remains at 9.30%
Six-month MCLR: Remains at 9.45%
One-year MCLR: Remains at 9.45%
Two-year MCLR and above: Remains at 9.45% for up to two years and at 9.50% for three years and above
Factors Behind MCLR Adjustments
MCLR is influenced by multiple factors, including deposit rates, the repo rate, operational costs, and the cost of maintaining the cash reserve ratio.
Changes in the repo rate can also impact MCLR, which then affects the interest rate on loans, raising the EMIs for borrowers.
The increase in MCLR now means customers with home, auto, or personal loans will face higher EMIs, while new borrowers will have to bear higher loan costs due to these adjusted rates.