- Big decision of HDFC Bank
- As soon as the Repo Rate increased, the Bank changed the rules
- What will be the result?
Repo Rate Hike Effect on HDFC : RBI decided to increase repo rate after 4 years. This decision will have a big impact on the loan holders. However, the monthly EMI burden will increase due to this. In fact weeks of EMIs are a huge burden every month. So even a small change in interest rates can make a big difference to millions of borrowers. The decision taken by the RBI is going to be somewhat impactful. But in all this, HDFC Bank has taken an important decision. What exactly is the decision and whether it will bring relief or shock to consumers”text-align: justify;”> Findability Sciences' launch of Lacta Insight for the dairy sector; Loss of milk will be avoided and savings will increase
HDFC Bank has made a major change in MCLR rates. This is likely to bring relief to some customers. But not every borrower will benefit immediately. HDFC Bank has revised its Marginal Cost of Funds Based Lending Rate MCLR. MCLR is a benchmark rate, based on which interest rate on linked loans is fixed. Therefore, for customers whose MCLRs are linked, this rate cut may have an impact on interest and installments i.e. EMIs.
The actual reduction in EMI will depend on which MCLR period the customer's loan is linked to and when its next reset is due. This means that, despite the rate cut, the change in EMI may not be visible immediately.
What changed after RBI hiked repo rate?
Meanwhile, the Reserve Bank of India hiked the repo rate by 25 basis points in its policy decision on October 7. As a result, the repo rate has increased from 5.25 percent to 5.50 percent. The repo rate hike is likely to affect customers of floating-rate loans linked to external benchmarks in particular. The impact on interest rates and EMIs on such loans can be seen relatively quickly.
Which customers benefit from the bank's rate cut?
Customers who have existing floating-rate loans linked to the MCLR can benefit from the bank's rate cut. But, a large portion of new home loans are linked to an external benchmark or repo rate. Therefore, the reduction in MCLR alone will not reduce the EMI of every home borrower.
Understand this before considering reduction in EMI
If your loan is linked to MCLR, your interest rate may change once the bank's new rate is implemented. But the amount of reduction in EMI will depend on the loan outstanding, remaining tenure, current interest rate and reset date. Therefore, it is not fair to expect a significant reduction in EMI just on the basis of change in MCLR. Borrowers should check their loan agreement and next reset date.
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