A "low interest" loan shouldn't mean you have very little interest in paying it back!
ICICI Bank is one of the most prominent banks in India that provides remarkable financial products and services. The housing loans provided by the bank are coupled with notable innovation and economical rates of interest. The base rate or MCLR of ICICI Bank have been constantly reducing over the last few years, giving customers a great deal on loans. Currently headquartered in Mumbai, the bank has grown to be one of the leading banks in the country in terms of growth and network.
| Tenure | MCLR Code | ICICI Bank MCLR Rates |
|---|---|---|
| Overnight | I – MCLR – ON | 8.55% p.a. |
| 1 month | I – MCLR – 1M | 8.55% p.a. |
| 3 months | I – MCLR – 3M | 8.60% p.a. |
| 6 months | I – MCLR – 6M | 8.75% p.a. |
| 1 year | I – MCLR – 1Y | 8.80% p.a. |
The first thing to keep in mind before switching from base rate to MCLR for ICICI Home Loan is the cost of transfer. Banks usually charge a borrower for switching from base rate to MCLR. This fee can range from anywhere between Rs.5,000 and Rs.20,000, depending on the bank. If you only have a few more months of EMI to be paid, consider this before planning to switch to MCLR.
The most important aspect to keep in mind before making a switch is the current outstanding balance, EMI and the interest cost on transfer of loan to MCLR. Consider the outstanding amount and calculate the interest payable on that amount in base rate and MCLR to work out which will be the more economical alternative.
If you still manage to save a considerable amount of money after bearing in mind the fees and the new interest rate, it would be a wise decision to switch over to the MCLR system.
Switching from Base Rate to MCLR in ICICI Bank Involves the Following Steps.
| Revised Date | Overnight MCLR | 1 Month MCLR | 3 Months MCLR | 6 Months MCLR | 1 Year MCLR |
|---|---|---|---|---|---|
| 01 March 2019 | 8.55% p.a. | 8.55% p.a. | 8.60% p.a. | 8.75% p.a. | 8.80% p.a. |
| 01 February 2019 | 8.55% p.a. | 8.55% p.a. | 8.60% p.a. | 8.75% p.a. | 8.80% p.a. |
| 01 January 2019 | 8.55% p.a. | 8.55% p.a. | 8.60% p.a. | 8.75% p.a. | 8.80% p.a. |
| 01 December 2018 | 8.55% p.a. | 8.55% p.a. | 8.60% p.a. | 8.75% p.a. | 8.80% p.a. |
| 01 November 2018 | 8.45% p.a. | 8.45% p.a. | 8.50% p.a. | 8.65% p.a. | 8.70% p.a. |
| 01 October 2018 | 8.40% p.a. | 8.40% p.a. | 8.45% p.a. | 8.60% p.a. | 8.65% p.a. |
| 01 September 2018 | 8.30% p.a. | 8.30% p.a. | 8.35% p.a. | 8.50% p.a. | 8.55% p.a. |
| 01 August 2018 | 8.05% p.a. | 8.05% p.a. | 8.10% p.a. | 8.35% p.a. | 8.40% p.a. |
| 01 July 2018 | 8.05% p.a. | 8.05% p.a. | 8.10% p.a. | 8.35% p.a. | 8.40% p.a. |
| 01 June 2018 | 8.05% p.a. | 8.05% p.a. | 8.10% p.a. | 8.35% p.a. | 8.40% p.a. |
| 01 May 2018 | 7.95% p.a. | 7.95% p.a. | 8.00% p.a. | 8.25% p.a. | 8.30% p.a. |
| 01 April 2018 | 7.95% p.a. | 7.95% p.a. | 8.00% p.a. | 8.25% p.a. | 8.30% p.a. |
| 01 March 2018 | 7.95% p.a. | 7.95% p.a. | 8.00% p.a. | 8.25% p.a. | 8.30% p.a. |
| 01 February 2018 | 7.80% p.a. | 7.80% p.a. | 7.85% p.a. | 8.15% p.a. | 8.20% p.a. |
| 01 January 2018 | 7.80% p.a. | 7.80% p.a. | 7.85% p.a. | 8.15% p.a. | 8.20% p.a. |
| 01 December 2017 | 7.80% p.a. | 7.80% p.a. | 7.85% p.a. | 8.15% p.a. | 8.20% p.a. |
All existing customers have an option to switch from the existing system to the MCLR system without considerably changing the operative interest rate on the loan. This would effectively be free of charge and will also be provided instantaneously, with immediate effect.
Switching from the FRR//PLR/I-Base based benchmark to MCLR in ICICI bank involves the following steps.
Request the bank in writing to switch your home loan from the base rate scheme to MCLR
After the loan is linked, request the banker to reduce the quantum of your interest. This may include a one-time fee, but the rate of interest payable by you will reduce henceforth
Every bank has the liberty to set their own MCLR. This is the base rate, below which a bank may not lend. Therefore, it is possible for different banks to have different MCLRs.
The benchmark MCLR for home loans availed from ICICI Bank is I – MCLR – 1Y. The reset period on this will an annual reset.
More often than not, it is advisable to opt for the MCLR with a shorter rest period. This is so because interest rates on loans have been falling constantly over the past few years. However, if one speculates the rates of interest to rise in future, it would be advisable to opt for the MCLR with a longer reset period. In short, if you speculate the interest rates to drop, opt for the 6 months MCLR. Whereas, if you speculate the rates of interest to rise, opt for the 12 month MCLR.
The country’s largest private sector lender based on assets, ICICI Bank, has reportedly announced an increase in its marginal cost of funds based lending rates (MCLR) across various loan tenors. The bank has raised its MCLR by 0.05% or 5 basis points (bps) across various tenors. While the one-year MCLR on which most of the bank’s retail loans are benchmarked has been revised to 8.70%, the MCLR for other loan maturities ranges between 8.45% and 8.60%. Experts believe the aggressive rate regime to be the result of the rising cost of funds and continuing poor loans registered in the bank’s register.
9 November 2018
A month after the Reserve Bank of India (RBI) hiked its key repo rate at a bi-monthly monetary policy review, the ICICI Bank has announced their revised Marginal Cost of funds based Lending Rate (MCLR). The bank has hiked rates across various tenures ranging between 15-25 basis points (bps). The new MCLR for one month tenure now stands at 8.55% - an increase of 15 bps - from the previously recorded 8.40%. Since the beginning of the year 2018, ICICI has reportedly hiked the MCLR for one-year tenor by up to 35 bps in total. According to reports, another increase in the MCLR could be expected in the coming period with banks speculating over another hike in the RBI’s key repo rate in the near future. Repo rate is the rate at which the RBI lends money to the banks. A hike in the repo rate results in the banks rising their respective MCLR, making loans more expensive for customers.
5 September 2018
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