Right after RBI kept policy rates for the eighth time in a row, India's largest private bank in terms of market value, HDFC Bank has revised its benchmark lending rates with effect from June 7. The lender revised its marginal cost of funds-based lending rates (MCLR). Will this impact your home loan EMIs at HDFC Bank?
HDFC Bank Lending Rates:
With effect from June 7, HDFC Bank revised MCLR to 9.30% for 6 months, 1 year, and 2 year tenure. While the highest tenure of 3 years has an MCLR of 9.35%. Further, 1-month and 3-month MCLR stood at 9% and 9.15%. Overnight, the MCLR rate is at 8.95%.
As per HDFC Bank's website, The Marginal Cost of the Fund-Based Lending Rate or the MCLR is the minimum interest rate a financial institution needs to charge for a specific loan. It dictates the lower limit of the interest rate for a loan. This rate limit is set in stone for borrowers unless specified otherwise by the Reserve Bank of India.
HDFC Bank Home Loan Rates:
Currently, HDFC Bank's home loan rates for amounts up to Rs 30 lakh, are 8.60% to 9.10% for salaried women and 8.65% to 9.15% for salaried others. Further, the rate is at 8.85% to 9.35% for salaried women on home loans up to Rs 30.01 lakh to Rs 75 lakh, and 8.90% to 9.40% for others on the same. Lastly, the interest rate is between 8.95% to 9.45% for salaried women on home loans of about Rs 75.01 lakh and above, and between 9.00% to 9.50% for other categories.
Will Home Loan EMIs rise?
However, broadly banks in India have shifted from MCLR to external lending rate which is linked to RBI's policy repo rate. HDFC Bank has not made any changes to it. Hence, not all borrowers will be impacted by the latest revision in MCLR.
With effect from April 1, 2016, all floating rate rupee loans sanctioned and renewed were directed by RBI to be priced concerning the Marginal Cost of Funds based Lending Rate (MCLR) which was introduced as the internal benchmark for banks.
However, from October 1, 2019, RBI introduced external benchmark lending rates including linking lending rates with policy repo rates. And directed the scheduled commercial banks to transmit to external benchmarks since MCLR did not deliver effective transmission of monetary policy. However, existing loans and credit limits linked to the MCLR/Baserate/BPLR will continue till repayment or renewal, as the case may be.
On June 7, in an un-unanimous vote, the six-member MPC led by RBI governor Shaktikanta Das decided to keep the repo rate unchanged at 6.5% for the eighth consecutive policy. This is in line with market estimates. Also, the MPC maintained their policy stance to 'withdrawal of accommodation'.
Accordingly, the standing deposit facility (SDF) rate remains unchanged at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent. MPC decided to remain focused on the withdrawal of accommodation to ensure that inflation progressively aligns with the target while supporting growth.
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