In a welcome move for borrowers, HDFC Bank has announced a reduction in its Marginal Cost of Funds-based Lending Rates (MCLR), making home loans, auto loans, and personal loans more affordable. The revised rates, effective from June 7, 2025, are expected to bring much-needed relief to loan customers who are struggling with high EMIs.

If you currently have a home, auto, or personal loan linked to MCLR with HDFC Bank, this update could positively impact your finances. The move follows the Reserve Bank of India’s recent decision to reduce the repo rate by 50 basis points, adding up to a total cut of 1% since February 2025.

This rate cut directly affects all loans tied to MCLR. Borrowers with floating-rate loans will see either a reduction in their monthly EMI or a shortened loan tenure—depending on their loan reset period and structure.

Here’s how HDFC Bank’s new MCLR rates look post-cut:

• Overnight and one-month MCLR: Reduced from 9.00% to 8.90%

• Three-month MCLR: Down from 9.05% to 8.95%

• Six-month and one-year MCLR: Lowered from 9.15% to 9.05%

• Two-year and three-year MCLR: Now 9.10%, down from 9.20%

The revised MCLR range at HDFC Bank now stands between 8.90% and 9.10%, depending on the loan tenure.

This adjustment by HDFC Bank comes on the heels of the RBI's monetary policy revision, which saw the repo rate drop by 0.50% in June 2025. Since the beginning of the year, the RBI has cut rates by a cumulative 100 basis points, aiming to ease borrowing costs and boost economic activity.

As a result, banks are now gradually passing on these benefits to their customers by reducing lending rates, including MCLR-based loan products.

MCLR (Marginal Cost of Funds-based Lending Rate) is the minimum interest rate below which a bank cannot lend, except in special cases. Introduced by the RBI in 2016, MCLR replaced the base rate system to bring more transparency and quicker transmission of policy rate changes.

For borrowers with floating-rate loans linked to MCLR:

• A drop in MCLR typically means lower EMIs.

• Alternatively, it can shorten your loan tenure, helping you repay faster.

• The exact benefit depends on your loan’s reset frequency (e.g., six-month or annual reset).

If your next loan reset date is approaching, you may soon notice a change in your EMI or total repayment schedule.

This rate cut creates a favorable window for new borrowers, especially those planning to take out home or vehicle loans. With reduced lending rates, banks are now offering more competitive loan products, making it a great time to secure affordable financing.

HDFC Bank's interest rate revision also makes it likely that other major banks may follow suit, leading to wider benefits across the lending landscape.

As interest rates begin to soften, borrowers are finally getting some breathing room. Whether you already have a loan or are planning to take one, HDFC Bank’s recent MCLR cut could help reduce your monthly financial burden and bring your long-term goals—like owning a home or buying a car—within closer reach.

Just remember: to benefit from these changes, make sure your loan is MCLR-linked and stay informed about your reset period. If you're shopping for a new loan, compare offers across lenders to get the best deal in this newly borrower-friendly environment.