HDFC Raises MCLR, Brace for Higher Home and Auto Loan Costs

In a move that has sent shockwaves across its customer base, HDFC, the country’s largest private sector bank, has announced an increase in Marginal Cost of Funds Based Lending Rate (MCLR) for certain tenure loans.

The bank has raised MCLR by 5 basis points, equivalent to 0.05 percent. This adjustment will lead to an increase in Equated Monthly Installments (EMIs) for all types of floating loans, including home loans, personal loans, and auto loans.

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The revised rates came into effect from March 7, 2024.

Revised HDFC Bank MCLR Rates

Overnight MCLR has been raised by 10 basis points, climbing to 8.95 percent from the previous 8.90 percent.

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One-month MCLR has seen a slight uptick of 5 basis points to 8.95 percent, with no alterations in this category.

The three-month MCLR has also increased by one basis point, rising to 9.15 percent from the previous 9.10 percent.

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Six-month MCLR remains unchanged at 9.30 percent.

MCLR for periods exceeding one year stands at 9.30 percent with no changes.

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MCLR for periods exceeding 2 years has been reduced to 9.35 percent.

MCLR for periods exceeding 3 years remains at 9.35 percent, without any adjustments.

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Factors Influencing MCLR

The determination of MCLR takes into account various factors such as deposit rates, repo rate, operational costs, and the cost of maintaining cash reserves ratio.

Fluctuations in the repo rate directly impact the MCLR rate, subsequently affecting the interest rates of loans and leading to an increase in borrowers’ EMIs.

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Implications for Loan Borrowers

The hike in MCLR will directly impact the interest rates of all associated loans, including home loans, auto loans, and personal loans.

As a result, customers will be required to pay higher EMIs than before, thereby increasing the financial burden on existing borrowers.

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New loan applicants will also face the brunt of expensive loans in the wake of these adjustments.

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