Increased Concern for Home Loan Borrowers! HDFC Bank Raises Interest Rates; Find Out Whose EMIs Will Be Affected
HDFC Bank MCLR Rates: HDFC Bank has increased its MCLR (Marginal Cost of Funds-based Lending Rate) by up to 15 basis points. Learn what the new interest rates are and which home loan customers might see an increase in their EMIs.
HDFC Bank MCLR Rates: If you have taken a home loan or a personal loan from HDFC Bank, it is now important to keep an eye on your EMI. The bank has raised its MCLR by 5 to 15 basis points. The new rates came into effect on November 7, 2024. This means that the interest burden on loans linked to the MCLR may increase in the near future. However, whether this impacts your finances immediately or after a few months will depend on the specific terms and conditions of your loan.
By how much has HDFC Bank raised interest rates?
HDFC Bank has adjusted the MCLR for loans across various tenures. Previously, the bank's MCLR ranged from 7.75% to 8.55%; this has now increased to a range of 7.85% to 8.70%. Specifically, the bank has increased the MCLR for tenures of 6 months and longer by 15 basis points.
See the full breakdown of the new and previous rates here:
Which customers will be affected?
This decision by the bank may impact customers who have taken home loans, personal loans, or other floating-rate loans linked to the MCLR. However, this does not mean that every customer's EMI will increase starting next month. In fact, every loan has an "interest rate reset date"—the date on which the bank adjusts the interest rate for your loan.
Loan Tenure
Old Interest Rate
New Interest Rate
Increase
| Overnight (1 Day) | 7.80% | 7.85% | 5 bps |
| 1 Month | 7.75% | 7.85% | 10 bps |
| 3 Months | 7.95% | 8.05% | 10 bps |
| 6 Months | 8.15% | 8.30% | 15 bps |
| 1 Year | 8.30% | 8.45% | 15 bps |
| 2 Years | 8.40% | 8.55% | 15 bps |
| 3 Years | 8.55% | 8.70% | 15 bps |
For example, if your loan's reset date is three months from now, the impact of the new MCLR may only become apparent at that time. Therefore, even though there is no change to your EMI for the time being, do not assume that it will remain the same in the future.
Will the EMI increase, or will the loan tenure be extended?
Following an increase in the MCLR, customers may face one of two scenarios: the bank could either increase your EMI in accordance with the terms of your loan, or it could keep the EMI unchanged while extending the loan tenure. In other words, the financial impact will not be the same for every customer; it will depend on your specific loan agreement, your current interest rate, and the bank's terms and conditions.
What should loan customers do now?
First, check your loan statement to determine whether your loan is linked to the MCLR or another benchmark, such as the repo rate. Next, find out when your interest rate is next due for a reset.
It is also important to understand that 1 basis point is equivalent to 0.01 percentage points. Consequently, an increase of 15 basis points translates to a 0.15 percentage point rise in the interest rate. The MCLR is a benchmark rate set by a bank, below which it generally does not offer loans. When determining this rate, banks take into account factors such as the cost of raising funds, operating expenses, and the costs associated with maintaining cash reserves.