Home, car and other loans are expected to become more expensive due to this increase.
The overnight, one-month, three-month and six-month marginal cost rates of Bank of Baroda funds-based MCLR rates were all raised from 0.05% to 6.50%, 6, 95%, 7.10% and 7.20%, respectively. Similarly, the MCLR for a one-year term stands at 7.35%, according to the Bank of Baroda press release.
According to the BSE filing, “We inform that the Bank has approved the revision of the marginal cost of funds based lending rate (MCLR) on April 12, 2022”.
Source: ESB website
For existing borrowers, the increase in MCLR will be felt in their EMI (equivalent monthly payment) when their home loan reset date arrives.
Usually, the reset date for a home loan between the bank and the borrower is six months or one year, as agreed in the loan agreement. Future EMIs (until the next reset date) will be calculated based on the MCLR rate plus margin, if any, in effect on the reset date.
The move came after the Reserve Bank of India (RBI) decided to keep policy rates unchanged at its monetary policy meeting on April 8, 2022.