SBI Hikes MCLR: Home and Car Loan EMIs Set to Increase Starting Today

SBI Hikes MCLR: Home and Car Loan EMIs Set to Increase Starting Today

SBI Hikes MCLR: Home and Car Loan EMIs Set to Increase Starting Today

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June 15, 2024 –

Borrowers are in for more financial strain as the State Bank of India (SBI) raises its marginal cost of funds-based lending rate (MCLR) by 10 basis points (bps) across all tenures. This hike is effective from today, despite the Reserve Bank of India (RBI) keeping the key interest rate or repo rate unchanged in its June monetary policy review.

The MCLR on one-year tenure has been increased from 8.65% to 8.75%, and on two-year tenure from 8.75% to 8.85%. The three-year MCLR has also been revised upward from 8.85% to 8.95%, as per the SBI website. Most of the bank’s loans are linked to the one-year MCLR rate, including auto loans, which are tied to the one-year MCLR, and personal loans, which are linked to the two-year MCLR.

Updated MCLR Rates:

  • One-month and Three-month Tenure: Increased from 8.20% to 8.30%
  • Six-month Tenure: Increased from 8.45% to 8.55%
  • One-year Tenure: Increased from 8.65% to 8.75%
  • Two-year Tenure: Increased from 8.75% to 8.85%
  • Three-year Tenure: Increased from 8.85% to 8.95%

The MCLR-based interest rates range from 8% to 8.10% for shorter tenures. With the rise in MCLR, home and auto loan EMIs are expected to increase, adding to the burden on borrowers.

When banks issue loans, they add a credit risk premium over the External Benchmarks Lending Rate (EBLR) and Repo-Linked Loan Rate (RLLR). As such, the hike in MCLR will directly impact the EMI amounts for existing and new loans.

Borrowers should brace for higher monthly payments as this increase in lending rates takes effect, impacting household budgets and financial planning.

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