HDFC Bank interest rate on home, personal, auto loans hiked - 5th time since May; EMIs set to go up

HDFC Bank Interest Rate On Home Loan, Personal Loan Hiked: HDFC Bank, the country's largest private lender, has increased its interest rate on all kinds of loans. According to the bank's website, it has increased the Marginal Cost of Funds Based Landing Rate (MCLR) on loans by up to 10 basis points. MCLR is the minimum interest rate below which banks or other financial institutions can't lend money. One basis point is one-hundredth of a percentage point. Accordingly, HDFC Bank's MCLR will now cost 0.10 per cent extra. 

HDFC Bank new interest rate on loans came into effect on September 7.

According to the HDFC Bank's website, one year MCLR has been hiked to 8.2 per cent while the overnight MCLR has jumped to 7.9 per cent. The MCLR for one month, three-month and six-month tenors will be 7.90 per cent, 7.95 per cent and 8.08 per cent, respectively.

HDFC Bank's decision to hike the MCLR will make all existing and fresh home, auto and personal loans costlier. Also, borrowing from the bank will become expensive for new customers. 

MCLR is the base rate set for banks as per the new RBI guidelines. It replaced the earlier base rate system to determine rates of interest for loans. RBI implemented MCLR on 1 April 2016. Most of the loans are linked to the one-year MCLR rate and hence directly impact EMIs. 

HDFC Bank has hiked MCLR five times since May when the RBI in an off-cycle meeting of the MPC increased the benchmark lending rate. 

HDFC Bank had first raised MCLR by 25 basis points in May. It then hiked the MCLR by 35 basis points in June and by 20 basis points n July. Again in August, the bank increased the MCLR by 10 basis points. The recent hike of 10 basis points is the fifth hike in the MCLR.