HDFC Bank Cuts Loan Rates: Home, Car, and Personal Loan EMIs to Become Cheaper from August 7

HDFC Bank Lowers MCLR Rates, Bringing Relief to Millions of Borrowers

In a welcome move for borrowers, HDFC Bank, India’s largest private sector bank, has announced a cut in its Marginal Cost of Funds Based Lending Rate (MCLR). The reduction, effective from August 7, 2025, is set to bring down EMIs on home loans, car loans, and personal loans—offering financial relief to millions of customers across the country.

What’s Changing?

The bank has reduced MCLR by 0.05% across most tenures, except for the two-year term, which remains unchanged. The overnight and one-month MCLR have been reduced from 8.60% to 8.55%, while the three-month MCLR is now 8.60%, down from 8.65%. Six-month and one-year MCLR have also been brought down by 5 basis points, now standing at 8.70% each. The three-year MCLR has dropped from 8.80% to 8.75%.

Here’s a quick look at the updated MCLR rates (effective August 7, 2025):

Tenure New MCLR Old MCLR

Overnight	8.55%	8.60%
1 Month	8.55%	8.60%
3 Months	8.60%	8.65%
6 Months	8.70%	8.75%
1 Year	8.70%	8.75%
2 Years	8.75%	8.75%
3 Years	8.75%	8.80%

(Source: HDFC Bank Official Website)

How Does This Affect Your Loan EMIs?

Loan EMIs are directly impacted by MCLR rates, especially for those borrowers who have opted for floating interest rates. A drop in MCLR typically means lower interest rates on loans, which leads to reduced EMIs. With this latest change, existing borrowers may see a marginal decline in their monthly outflows, depending on the reset period of their loans.

For example, if you have a floating home loan linked to HDFC Bank’s one-year MCLR, your interest rate may be revised to a lower rate when your reset period arrives, thereby reducing your EMI.

Why MCLR Matters

MCLR is the minimum interest rate below which banks are not allowed to lend, except in certain cases allowed by the Reserve Bank of India. Introduced in April 2016, MCLR replaced the earlier base rate system and is calculated based on the bank’s cost of funds, operational costs, and other economic factors like the CRR and repo rate.

Whenever the Reserve Bank of India (RBI) changes its key lending rate (the repo rate), it indirectly influences the MCLR. However, it is important to note that RBI, in its most recent policy review, chose not to alter the repo rate. Despite this, HDFC Bank has taken a proactive step to ease the financial burden on borrowers.

Expert View

Financial experts believe that even a small cut like 5 basis points can have a meaningful impact for those with large outstanding loan amounts over a long tenure. This move by HDFC Bank is seen as a customer-friendly step, especially in times when inflation and other household expenses are rising.

What Should Borrowers Do?

If you already have a loan from HDFC Bank, you don’t need to take any immediate action. Your EMI will automatically be recalculated when your reset date arrives. However, if you're planning to take a new loan, now may be a good time to lock in a better rate.

Borrowers should also stay informed about further MCLR revisions and RBI policy changes, as these can affect loan rates in the future.

Conclusion

HDFC Bank’s latest move to reduce MCLR across various loan tenures brings timely relief to customers amid a stable interest rate environment. As EMIs decrease, borrowers can expect improved affordability, making this a strategic moment to review or refinance existing loans. Keep an eye on your loan reset dates and consult your bank for further details on how this rate cut may benefit your finances.