Index Fund Corner
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This hike occurs despite the Reserve Bank of India (RBI) dropping from 6.5% to 6.25%. This is the first reduction in five years and aims to ease borrowing costs for home buyers.
The bank has not changed its MCLR rate for all other tenures;
The revised fees are as follows:
tenuremclr (%) innight9.20%1 month9.20%3 months9.30%6 months99.40%1 year99.40%2 year99.45%
With this revision, HDFC Bank’s MCLR ranges from 9.20% to 9.45%.
What is MCLR?
The marginal cost of a fund-based loan rate (MCLR) is the claim of the minimum interest rate bank for the loan. We will set a lower limit on loan interest rates unless revised by the Reserve Bank of India (RBI). RBI introduced MCLR in 2016 to ensure fair pricing for borrowers.
Borrowers with loans linked to MCLRs will see changes in loan EMI when their MCLR rates fluctuate.
Those with loans adopted prior to 2016 will still be subject to a base rate or Benchmark Prime Lending Rate (BPLR).
As MCLR increases, so does EMI for loans such as home, individuals, and business loans.
