HDFC Bank has cut its marginal cost of funds-based lending rate (MCLR) on select tenures by up to 5 basis points (bps). After the revision, HDFC Bank MCLR will now range between 9.15% and 9.45%. The revised rates are applicable from January 7, 2025 onwards.
Lower MCLR leads to a reduction in loan interest rates, which lowers EMIs and lowers borrowing costs.
Impact on borrowers: The reduction in MCLR rates will have a direct impact on Equated Monthly Instalments (EMIs) on old floating rate loans such as home loans, personal loans, and business loans which are linked to MCLR. EMIs on these loans will also be lowered with a reduction in MCLR rates.
Latest HDFC Bank lending rates
The overnight MCLR has been cut by 5 bps, from 9.20% to 9.15%. The one-month MCLR has been kept unchanged at 9.20%, the three-month MCLR is unchanged at 9.30%. The six-month and one-year MCLRs have been cut by 5 bps from 9.50% to 9.45%, and the two-year MCLR is kept unchanged at 9.45%. The three-year MCLR is cut by 5 bps from 9.50% to 9.45%.
| Tenor | MCLR |
| Overnight | 9.15% |
| 1 Month | 9.20% |
| 3 Month | 9.30% |
| 6 Month | 9.40% |
| 1 Year | 9.40% |
| 2 Year | 9.45% |
| 3 Year | 9.45% |
Source: HDFC Bank website
What is MCLR?
According to the HDFC Bank website, “MCLR is the minimum interest rate a financial institution charges for a specific loan. It dictates the lower limit of the interest rate for a loan. Until the Reserve Bank of India indicates otherwise, this rate cap is fixed for borrowers.”
HDFC Bank’s other lending rates
HDFC Bank’s benchmark Prime Lending Rate is 17.95% p.a., with effect from September 9, 2024. The applicable base rate is 9.45% and is effective from September 9, 2024.
HDFC home loan interest rates
HDFC Bank’s new home loan interest rates are linked to the policy repo rate: The interest rate for Adjustable Rate Home Loan (ARHL) type of loan is linked to HDFC Bank’s External Benchmark Lending Rate (EBLR), which is based on the repo rate. The interest rate for an ARHL can change throughout the loan term.
Note that all rates are benchmarked to the Policy Repo Rate.
Current applicable Repo Rate = 6.50%
Special home loan rates for salaried & self-employed
For all loans, interest rate = 6.50 + 2.25% to 3.15% = 8.75% to 9.65%
Standard home loan rates for salaried & self-employed
For all loans, interest rate = 6.50% + 2.90% to 3.45% = 9.40% to 9.95%
*The above Home Loan interest rates/ EMI are applicable for loans under the Adjustable Rate Home Loan Scheme (Floating Interest Rate) of (HDFC Bank and are subject to change at the time of disbursement. The Home Loan interest rates above are linked to HDFC Bank’s Repo Rate and are variable through out the tenor of the loan. All loans are at the sole discretion of HDFC Bank.
What should home loan borrowers do in a falling interest rate scenario?
Whenever interest rate falls the lender offers an option to reduce your EMI while keeping the tenure unchanged or to reduce the tenure of the loan while keeping the EMI unchanged. Unless there is an affordability issue, it is better to go for a reduction of tenure as your total interest outgo comes down.
How much interest rate cut is likely in 2025?
Though the RBI has not gone for a repo rate cut in December, the central bank is most likely to do so in upcoming Monetary Policy Committee meetings in 2025. “If and when the USD stabilises or retracts, emerging markets such as India may find an opportunity to ease. We expect two repo rate cuts of 25 bps over February and April, taking the repo rate to 6%. Our real rate maths suggests that this will be a shallow rate cutting cycle of 50 bps,” a report from HSBC Research stated.
The future interest rate scenario is still uncertain. Some experts see no rate cut in the coming few quarters. Others, however, foresee a significantly larger rate drop in 2025 than 50 basis points. Nomura, a Japanese investment bank, anticipates the RBI to decrease interest rates by as much as 100 basis points in 2025.
