MUMBAI: Floating rate home loans and EMIs are set to rise. Two big lenders - PNB and ICICI Bank and the country’s largest mortgage financier, HDFC - on Wednesday raised their lending rates ahead of the MPC meeting next week, where markets are pricing in a repo rate hike of 35 bps.
PNB and ICICI Bank have raised their internal benchmark or marginal cost of fund-based lending rate (MCLR) by 15 basis points (bps) and 30 bps each effective June 1. A basis point is one-hundredth of a percentage point. MCLR has substituted the base rate and is the minimum rate below which a bank cannot lend. Its formula is based on the bulk deposits rate.
If the latter rises, the bank raises the MCLR. PNB’s overnight tenor has risen to 6.75% from 6.6% , one month to 6.8% from 6.65%, three months to 6.9% from 6.75%, six months to 7.10% from 6.95%, one year to 7.4% from 7.25% and three year tenor to 7.7% from 7.55%, the bank said in a notification to the stock exchanges. HDFC, on the other hand, raised its retail prime lending rate (RPLR) on housing loans, on which its adjustable-rate home loans are benchmarked, by 5 bps with effect from June 1. MCLR like the externally benchmarked linked lending rates rises when the repo rate increases.