Banks Raise MCLR: Is Your Home Loan EMI Going Up?

Some banks have quietly raised their MCLR — the benchmark that sets your home or car loan interest rate. If your loan is MCLR-linked, your EMI could go up at the next reset date without any warning from your bank.

Here's what happened: Canara Bank raised MCLR for overnight to six-month tenures by 5 basis points, keeping longer-tenure rates unchanged.. MCLR hikes happen when banks face tight liquidity — meaning they have less cash to lend and must charge borrowers more to cover their costs.. MCLR-linked loans (mostly home, car, and personal loans taken before October 2019) automatically reprice at each reset date, which hits your EMI directly..

What you should do: Check your loan agreement to confirm whether your loan is MCLR-linked or repo-rate linked — your bank's welcome letter or net banking loan section will show this.. Ask your bank for your next reset date — this is when any MCLR change actually affects your EMI, so you have time to plan or prepay before it hits.. Compare switching to an external benchmark-linked loan (repo-rate linked): RBI rules allow a one-time switch for a nominal fee, which can give you more transparent and often lower rates..

If your home loan is over 5 years old and still on MCLR, you are almost certainly paying 0.30–0.50% more than new borrowers on repo-linked loans — switching can save lakhs over the remaining tenure.