How much your EMI will go up


Following the Reserve Bank of India’s (RBI) surprise move to raise repo rates by 40 basis points (100 basis points = 1%) to 4.40 percent, HDFC Bank upped its marginal-cost based lending rate (MCLR) with effect from May 7, 2022.

On all loan tenors, HDFC Bank raised its MCLR by 25 basis points (bps). As a result, housing, vehicle, personal, and other loans will all become dearer. For several types of loans, bank customers would witness an increase in equivalent monthly payments (EMI). Other banks have already started hiking repo rate linked home loans as well.

It is important to note that any change in the repo rate affects the MCLR and, results in hiking of interest rate on loans.

According to the HDFC Bank website, MCLR from May 7, 2022 will be in the range of 7.15-7.70 percent for tenure of overnight to 3-years.

In the below-mentioned table, we have assumed MCLR as interest rate. However, the actual interest rate charged by the bank includes margin as well. The table is showing a tentative hike in your EMI due to hike in MCLR. The margin charged by the bank depends on various factors such as CIBIL score, nature of job etc. The actual hike in your EMI outgo will depend on MCLR + margin charged by the bank.

If your home loan is Rs 30 lakh

Loan Amount (Rs)Rs 30 lakh
Tenure (Years)20 years
Earlier Interest Rate (%)7.25%
Earlier EMIRs 23,711
New interest rate7.50%
New EMI24,168
Increase in EMIRs 457

If your home loan is Rs 50 lakh

Loan Amount (Rs)Rs 50 lakh
Tenure (Years)20 years
Earlier Interest Rate (%)7.25%
Earlier EMIRs 39,519
New interest rate7.50%
New EMIRs 40,280
Increase in EMIRs 761


If your home loan is Rs 80 lakh

Loan Amount (Rs)Rs 80 lakh
Tenure (Years)20 years
Earlier Interest Rate (%)7.25%
Earlier EMIRs 63,230
New interest rate7.50%
New EMIRs 64,447
Increase in EMIRs 1,217


For home loan borrowers, it is important to note that hike in your EMI outgo will impact only when the reset date of your loan arrives. On the reset date, the bank will hike the interest rate charged on your home loan on the basis of the prevailing MCLR. Usually, banks link MCLR based home loans to one-year MCLR rate.

Thus, if your home loan is linked to MCLR rate and reset date of your home loan is in August, then bank will hike interest rate charged on your home loan in August. Till then you will continue to pay existing EMI.

This is unlike external benchmark based linked based loans, where interest rate are reviewed and revised atleast once in every three months. Thus, any change in external benchmark (repo rate etc.) will lead to faster change in your EMI outgo.



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