Your existing and new?loan EMIs may pinch more soon as many banks have started increasing their interest rates.?
Recently, Axis Bank, SBI, Bank of Baroda and Kotak Mahindra Bank are amongst the banks that have hiked their benchmark MCLR? Marginal Cost of Funds based Lending Rate), basis which the linked loan¡¯s interest rates are set.?
Axis Bank has hiked its MCLR by 5 basis points (bps) with effect from 18 April 2022.Its one year tenor MCLR will rise to 7.35%, whereas the overnight, one-month, three-month and six-month MCLRs have been hiked by 0.05% each to 7.20%, 7.30% and 7.35% respectively.
Also Read:?Makes Sense? Does It Make Sense To Buy A House Or Rent One
The increase in benchmark one-year tenor MCLR is expected to make consumer loans pricey, including ?personal, auto and home loan EMIs among others.
Another private sector lender, Kotak Mahindra Bank, increased its one-year MCLR by 5 bps to 7.4 per cent, from April 16th 2022.
On the other hand,? India¡¯s largest public sector bank SBI too, increased its MCLR by 10 basis points, with effect from April 15th 2022, across all tenors.?
And that's not all. Last week, Bank of Baroda had increased its MCLR by 5 basis points, with effect from April 12th 2022.
With many banks beginning to hike their MCLRs, its expected that other banks may soon follow the suit and lead to existing as well as new borrowers of MCLR linked loans paying more from their pocket through higher EMIs.?
This shift in interest rate cycle comes after the past two pandemic hit years have seen lending rates, especially of home loans, falling to all time lows amidst the falling interest rate regime.?
But it's noteworthy that in this month¡¯s MPC meeting the RBI had not hiked the repo rate, i.e. the rate at which it lends to banks. Now it remains to be seen whether banks hike repo linked loan¡¯s rates as well along with MCLR linked ones in coming months, and whether RBI hikes the repo rate in next set of MPC meetings linked up in coming months.
Also Read:?Does It Make Sense For Millennials To Apply For A Home Loan In Their 20s
For the latest financial news, keep reading Indiatimes Worth.??Click here.