Soon after HDFC Bank increased its MCLR, the State Bank of India has hiked its MCLR, BPLR and base rate w.e.f. December 10, 2018.
Soon after HDFC Bank increased its marginal cost of funds based lending rate (MCLR), effective from December 7, the State Bank of India today hiked its MCLR, BPLR and the base rate w.e.f. December 10, 2018.
SBI has increased its MCLR across all tenors, although marginally, by 5 bps. For instance, the bank has hiked its over night and one month MCLR from 8.15 per cent to 8.20 per cent, while three month MCLR has been raised to 8.25 per cent from 8.20 per cent earlier. Similarly, six month MCLR has been increased to 8.40 per cent from 8.35 per cent and one year MCLR to 8.55 per cent from 8.50 per cent. Two year and three year MCLR now stands at 8.65 per cent and 8.75 per cent as against 8.60 per cent and 8.70 per cent, respectively, earlier. This means that all types of loans – ranging from auto loan and personal loan to home loan – will now become a bit costlier.
Tenor-wise MCLR effective from December 10, 2018:
Apart from MCLR, SBI has also increased its benchmark prime lending rate (BPLR) from 13.75 per cent per annum to 13.80 per cent per annum w.e.f. 10.12.2018, while base rate has been increased from 9.00 per cent to 9.05 per cent per annum, effective from December 10, 2018.
Talking about the impact on borrowers of the hike in lending rates, Rahul Jain, Head-Personal Wealth Advisory, Edelweiss, said, “As banks have started raising their marginal cost-based lending rates (MCLR), it will have a direct impact on borrowers as the interest rates on loans will increase. For the existing borrowers, the increase in EMI will be felt when the reset date of the loan arrives. On the reset date, the future EMIs will be calculated based on the MCLR effective on that date.”
Ratan Chaudhary, Associate Director & Head of Home Loans, Paisabazaar.com, also said that while the MCLR hike will increase interest rate for fresh home loan borrowers, existing home loan borrowers will continue to pay their existing rates till their next interest reset date. “MCLR prevailing on their next reset date will remain applicable till the subsequent reset date and any increase or decrease in the MCLR will be factored in their home loan interest rate,” he said.
According to Jain, a bank usually offers home loans with a shorter or longer duration and the interest rate gets changed as per market conditions under the MCLR regime. For the shorter duration it might have an impact, but if we look from the long-term perspective, the rate is expected to go down.