Home loan EMIs may rise in the future due to rising interest rates. The RBI has kept the monetary policy rates unchanged and banks may look to raise loan interest rates. Banks may also raise the deposit rates so that they can garner higher funds. A hike in the deposit rates usually leads to lending rates being scaled up as well. HDFC Bank has already increased lending rates to the tune of 10 basis points. The MCLR has been scaled up for 6 months, 1 year and 2 years to 8%, 8.20% and 8.30% respectively.
Kotak Mahindra Bank, Axis Bank, Yes Bank and IndusInd Bank have also raised their MCLR to the tune of 5-10 basis points on an average. The interest rates are expected to go up across most banks due to liquidity circumstances and also due to the fact that loan growth is outstripping the growth in deposits for the first time. There could be an upward pressure on both deposit and interest rates according to experts. Even though Bank of Baroda has lowered the MCLR for tenures lower than 1 year by 10-25 basis points, 8.30% is still the MCLR rate for a 1 year tenure.
Deposit rates go up when banks need to get more funds. SBI started raising bulk deposit rates and many other banks are following suit. Between the 29th of November, 2017 and the 30th of January, 2018, the rates for 1 year deposits of more than Rs. 1 crore have increased to 6.25% which represents an increase of 200 basis points. RBI has already lowered base rates by 200 basis points from January 2015 although banks have not reduced as much for borrowers. However, many of them have now lowered base rates although these continue to be more than the MCLR. The 1 year MCLR at SBI is currently at 7.95% while the base rate is still at 8.65%.