HDFC Bank has increased its Marginal Cost of Funds-based Lending Rates (MCLR) by 5-15 basis points (bps) across all seven tenures, effective November 7.
The revision could increase borrowing costs for customers whose home loans, personal loans and other borrowings are linked to the bank’s MCLR.
Following the latest revision, HDFC Bank’s MCLR rates range from 7.85% to 8.70%, compared with 7.75% to 8.55% earlier.
A basis point is one-hundredth of a percentage point. The increase is higher for longer-duration tenures, with the six-month, one-year, two-year and three-year MCLR rising by 15 bps each.
HDFC Bank’s revised MCLR rates from November 7
According to the revised interest rates published on HDFC Bank’s official website, the bank has increased its MCLR across all seven tenures.
| MCLR tenure | Earlier rate | New rate | Increase |
|---|---|---|---|
| Overnight | 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 |
How will HDFC Bank’s MCLR hike affect borrowers?
The latest revision could make loans more expensive for existing borrowers whose interest rates are linked to HDFC Bank’s MCLR.
This includes eligible home loans, personal loans, auto loans and other floating-rate loans linked to the benchmark. However, the increase will not necessarily translate into an immediate rise in EMIs for all borrowers.
The actual impact will depend on the benchmark linked to the loan, the applicable spread and the interest rate reset date specified in the loan agreement.
For instance, if a borrower’s loan is linked to the six-month MCLR, the revised rate could be passed on at the next applicable reset date. The borrower’s interest rate could increase by 15 bps, subject to the loan terms.
Depending on the bank’s repayment structure and loan agreement, an increase in the lending rate could result in a higher EMI or an extension of the loan tenure.