HDFC Increases MCLR Rate, Impacting Home and Car Loans
HDFC Bank, one of India’s leading private sector banks, has yet again hiked its Marginal Cost of Funds Based Lending Rate (MCLR) rate.
This latest move will increase the MCLR rate from 0.05 percent to 0.15 percent and went into effect on May 8, 2023, as per the information provided on the bank’s official website.
The increase in the MCLR rate will directly affect the Equated Monthly Installment (EMI) payments of home loans and car loans.
HDFC Bank states that the MCLR rate for one night has increased to 7.95%, while the rates for one month, three months, six months, one year, two years, and three years are 8.10%, 8.40%, 8.80%, 9.05%, 9.10%, and 9.20%, respectively.
Customers who are already paying home loan installments will have to pay more in the form of EMIs due to this increase, and those planning to take a car loan will have to pay more interest than before.
The hike applies to the floating interest rate and has no effect on the fixed interest rate.
Impact on Home and Car Loans
The increase in the MCLR rate will result in the cost of loans becoming more expensive for customers, particularly for home and car loans, which are typically long-term loans with large principal amounts.
With this hike, HDFC Bank’s home loan and car loan EMIs will increase, making it a difficult situation for borrowers who are already struggling to meet their financial commitments.
MCLR is the minimum interest rate that banks will lend money to their customers. The RBI introduced the MCLR system in April 2016 to improve monetary policy transmission, and banks are required to review and publish their MCLR every month.
Banks add a spread or a margin to the MCLR to arrive at the final lending rate for a customer.
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