HDFC Bank trims these lending rates from May 7. Will your EMIs go down?
HDFC Bank has lowered its lending rates on certain loans, bringing some relief to borrowers. The bank has reduced its Marginal Cost of Funds-based Lending Rate (MCLR) by up to 15 basis points (bps). A cut of 15 bps means an interest rate drop of 0.15%. The new rates take effect from May 7, 2025.
Now, HDFC Bank's MCLR ranges from 9.00% to 9.20%, depending on the loan tenure. Earlier, these rates were between 9.10% and 9.35%. This reduction could bring some relief to borrowers through lower EMIs (equated monthly instalments) or shorter loan tenures, whose loans are linked to MCLR. WHY IS THE BANK REDUCING RATES?
This move comes shortly after the Reserve Bank of India (RBI) cut the repo rate by 25 bps in April, taking the total cut to 50 bps since February 2025.
When the repo rate goes down, it reduces the cost of funds for banks. Many lenders, including HDFC Bank, are now passing on this benefit to customers by lowering their lending rates. WHAT IS MCLR AND WHY DOES IT MATTER?
MCLR stands for Marginal Cost of Funds-based Lending Rate. It's the minimum rate below which a bank cannot lend, unless allowed by the RBI. It is the benchmark rate that banks use to decide the interest on floating-rate loans like home loans, car loans, and personal loans.
If you've taken a loan linked to the MCLR, a cut in this rate could mean either your EMIs go down or your loan gets repaid faster. However, this change depends on your loan's reset date and whether it's a fixed or floating rate loan. NEW MCLR RATES AT A GLANCE
HDFC Bank has trimmed its MCLR rates across various tenures. The overnight and one-month rates are down by 10 bps to 9%.
The three-month rate has dropped 15 bps to 9.05%, while the six-month rate is now 9.15%. The one-year MCLR stands at 9.15% after a 15 bps cut, and both the two-year and three-year rates have been reduced to 9.20%.
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