Axis Bank has officially hiked its base rate for loans by up to 30 basis points. The base rate has been hiked to 9.5% from 9.2% and will be effective from the 3rd of January, 2019. The base rate at HDFC Bank is currently at 9.3% and this is 8.85% for ICICI Bank. SBI (State Bank of India) currently has its base rate at 9% while Bank of Baroda has the base rate at 9.4% which will be effective from the 1st of January, 2019.
However, Axis Bank has not made any changes to its Marginal Cost of Funds based lending rate or the MCLR. This comes at a time when several other banks in the country have started hiking their MCLR rates. Karnataka Bank has already confirmed a hike in MCLR by 0.15% while HDFC has increased its retail prime lending rate to the tune of 0.1%. Customers who are still on the base rate for their home loans may consider switching to the MCLR system.
Customers on the base rate may either switch to MCLR with the same banking institution or refinance the home loan from another financial institution under the MCLR system. They may choose to continue with the base rate for the home loan in case the loan is close to being finished since there are costs of switching to be taken into account. MCLR is always a better option in case the differential is wide between the base rate at which old customers are repaying their loans and the present MCLR. One may look for lower rates of interest with the same financial institution or any other bank in this scenario.