With this hike, the bank’s overnight rate MCLR has now gone up from 7 per cent to 7.15%, while its one-month, three-month and six-month rates are now 7.30 per cent, 7.50 per cent and 7.70 per cent respectively. The one-year MCLR, two-year MCLR and three-year MCLR are 7.90 per cent, 8.10 per cent and 8.25 per cent, respectively.
interest rate of retail loan schemes
With effect from October 11, 2022, the bank’s EBLR has been increased to 8.70 percent i.e. RBI Repo Rate (5.90%) + Spread (2.80%). EBLR in September was 8.20%.
RBI rate hike
reserve bank of india (RBI) once again increased the repo rate in an effort to tackle inflation. In its latest monetary policy announcement on September 30, 2022, the central bank raised the repo rate by 50 basis points (bps; 100 basis points = 1%) to 5.90%. This is the fourth repo rate hike within 5 months in a series of hikes that began on May 4 this year.
After RBI hike, many banks including State Bank Of India, PNB, ICICI BankBank of Baroda, Bank of India, and Mortgage Lenders HDFC Ltd. has increased its loan interest rates. Yes Bank, HDFC bank, Bank Of Baroda and others have increased their MCLR on loans. Here is a quick comparison of banks and NBFCs that have hiked lending rates after the RBI hike, and some banks that have also increased their MCLR.
Existing borrowers, who have taken a home loan on a floating rate basis, will see their EMIs increase further. Most new borrowers, whether servicing fixed or floating rate loans, will need to pay higher EMIs for their loans as and when banks pass the latest policy rate hike.
Here’s a look at what home loan borrowers should do now.
Avoid tenure extension if you can afford higher EMI
Whenever interest rates rise, lenders prefer to extend the tenure of the loan instead of EMI which is easier to operate with their existing home loan borrower as they do not need to change the EMI mandate. However, it is not in the best interest of the borrower. Any extension in EMI adds up to your total interest payable amount. You can easily save it by asking your lender to keep the tenure as you are ready to pay higher EMIs.
Go for Partial Prepayment
If you have savings or investments that are earning returns less than the rate of interest that you are paying on our home loan, use it to partially prepay your home loan to control EMI outgo It is better to do However, you need to take into account the interest payment on your home loan and the tax benefit you get on repayment of the principal. If the net profit in prepayment is high then you should go for prepayment. Otherwise you can retain your investment.
foreclose high interest arrears
Apart from home loan, if you have taken expensive loans like personal loan, consumer durable loan, two-wheeler loan, used car loan or revolving credit from credit card, instead of prepaying your home loan, which is the least expensive loan If you prefer to foreclose these expensive loans to reduce the overall EMI burden in your monthly household budget, you should.