SBI, HDFC, ICICI and PNB hike lending rates: Your EMIs to go up, new loans to be costlier; what you should do

If you are planning to take a home or other loan, or if you already have one, this news will make you worry a lot. Banks like State Bank of India (SBI), HDFC, ICICI and Punjab National Bank (PNB) have hiked their lending rates, which has not only made new loans costlier but will also likely increase the EMIs in existing loans.

HDFC has hiked its home loan lending rates by 10 basis points. "HDFC has increased its Retail Prime Lending Rate (RPLR), on which its Adjustable Rate Home Loans (ARHL) are benchmarked, by 10 basis points, with effect from October 1, 2018," an official statement revealed the nasty bit of news.

The largest public sector bank, SBI has also increased its Marginal Cost of funds based Lending Rate (MCLR) by 5 basis points with effect from October 1.

On the other hand, PNB has also hiked its benchmark lending rates for short-term loans by up to 0.2 per cent.

The ICICI Bank has also followed suit by increasing its 6-month MCLR to 8.6 per cent from 8.5% and one-year MCLR to 8.65 per cent from 8.55%.

There are two types of loan - fixed rate loan and floating rate loans. Experts always prefer floating rate for longer period loans. A changing interest rate cycle thus benefits the customer who opts for the floating rate loan.

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Other banks are also expected to follow the move and hike their lending rates before the RBI Monetary Policy meeting.

A Reuters poll last week had indicated that the Reserve Bank of India is likely to raise interest rates, despite relatively tame inflation, to prop up a retreating rupee. It is likely that banks have already anticipated the move and have hiked the lending rates even before the policy meet.