Your EMI payment will rise in tandem with an increase in your home loan‘s interest rate (both EBLR and MCLR). Whether the rise will impact you depends on the benchmark to which your mortgage loan is related.
Also read: Struggling to pay home loan EMI? You can pay less now, but there’s a trade off
ICICI Bank lending rates
According to the ICICI Bank website, the overnight, one-month MCLR rate has been increased to 8.50 percent from 8.40 percent. The three-months, six months MCLRs at ICICI Bank have been increased to 8.55 percent, and 8.70 percent, respectively. The one-year MCLR is hiked to 8.75 percent.
|
MCLR effective March 1, 2023 |
|
|
Tenures |
I-MCLR |
|
Overnight |
8.50% |
|
One Months |
8.50% |
|
Three Months |
8.55% |
|
Six Months |
8.70% |
|
One Year |
8.75% |
Other banks
Along with ICICI Bank, PNB, Bank of India has also revised their MCLR with effect from March 1, 2023.
ICICI Bank EBLR
According to the ICICI Bank website, “ICICI Bank External Benchmark Lending Rate” (I-EBLR) is referenced to RBI Policy Repo Rate with a mark-up over Repo Rate. I-EBLR is 9.25% p.a.p.m. effective September 30, 2022.”
RBI policy rate
The Reserve Bank of India has hiked repo rate by 25 basis points to 6.50% in its February monetary policy meeting with an aim to tackle inflation.
“Repo Rate“ or “Policy Repo Rate” means the rate of interest published by RBI on the RBI website from time to time as Repo Rate or Policy Repo Rate.
According to ICICI Bank, here are important FAQs on loan a borrower should know.
Will ICICI Bank discontinue the previous benchmark rates i.e. I-Base/FRR/PLR/MCLR?
According to the ICICI Bank website, “For all new floating rate Home/Mortgage Loans sanctioned from Oct 01, 2019, the Bank will only offer loans linked to Repo Rate. However, the existing loans will continue on the respective PLR/FRR/I-Base/MCLR till its repayment.”
Will the existing loans booked under PLR/FRR/I-Base/MCLR get automatically reset under Repo linked benchmark rate?
No, the existing loans will continue under the existing benchmark rate.
Will the existing customers linked to FRR//PLR/I-Base/MCLR based benchmark rate be allowed to convert to Repo based pricing?
“Yes, all existing customers have an option to switch from the existing system of FRR/PLR/I-Base/MCLR (FRR/PLR/I-Base/MCLR +/- spread) to the new system of Repo linked rate (Repo + spread) at prevailing rate applicable for new loan with the same category of customer,” as per the ICICI bank website.
What is the process for changing from an existing benchmark rate of FRR/PLR/I-Base/MCLR to Repo linked benchmark rate?
The customer must go to the closest Asset Servicing Branch and submit the conversion request letter in order to switch from the current benchmark rate of FRR/PLR/I-Base/MCLR to a repo-based benchmark rate.
What does reset of floating rate loans linked to external benchmark mean?
As per Master Direction – RBI (Interest Rate on Advances) Directions, 2016, floating rate loan means a loan on which interest rate does not remain fixed during the tenure of the loan. Hence, in case of floating interest rate loan, the benchmark rate of the loan gets revised on a pre-defined frequency. As per RBI guidelines, floating interest rate loans linked to external benchmark should reset at least once in three months.