HDFC Bank Interest Rate: HDFC Bank reduced interest rates, home loan EMI will reduce due to reduction in MCLR, check details

HDFC Bank Cuts Lending Rates:Giving great relief to its customers, HDFC Bank has reduced its Marginal Cost of Funds-Based Lending Rate (MCLR) for some period. After this change, there is a possibility of reduction in EMI of home loan and other types of loans. The new interest rates have come into effect from January 7, 2025. This reduction made by HDFC Bank has brought relief to those customers who are repaying home loans or other floating rate loans.

HDFC Bank’s new interest rates

HDFC Bank has reduced MCLR rates by up to 5 basis points for loans with certain tenures. After this deduction, the bank’s MCLR rates will be between 9.15% to 9.45%. This step will not only reduce the EMI but also reduce the total cost of the loan.

• Overnight MCLR has been reduced by 5 basis points from 9.20% to 9.15%.

• There is no change in 1 month and 3 month MCLR, which remain at 9.20% and 9.30% respectively.

• MCLR of 6 months and 1 year has reduced by 5 basis points from 9.50% to 9.45%.

• 3 year MCLR has also reduced from 9.50% to 9.45%.

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Which customers will get the benefit?

The direct benefit of HDFC Bank’s MCLR reduction will be given to those customers whose loan rates are linked to MCLR. EMI of floating rate loans like home loan, personal loan, and business loan will reduce. After this deduction, customers can either reduce their EMI or choose to reduce the loan tenure. However, reducing the tenure of the loan is better in this regard, because it reduces the total burden of interest in loan repayment.

(Source: HDFC Bank website)

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What is MCLR?

Marginal Cost of Funds-Based Lending Rate i.e. MCLR is the minimum interest rate charged on loans given by any financial institution. This rate decides what the minimum interest rate can be on a loan.

HDFC Bank Home Loan Interest Rates

HDFC Bank’s floating rate home loan interest rates are linked to the repo rate. At present this repo rate is 6.50%.

• Special Home Loan Rates (Salary and Self-Employed): 6.50% + 2.25% to 3.15% = 8.75% to 9.65%

• Standard Home Loan Rates (Salary and Self-Employed): 6.50% + 2.90% to 3.45% = 9.40% to 9.95%

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What to do when interest rates are cut?

Whenever interest rates are cut, banks give customers the option to reduce EMI or reduce the loan tenure. If your ability to repay EMI is good, then reducing the loan tenure is a better option. This reduces the total interest payment.

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What will be the future trend in interest rates?

RBI has not made any change in the repo rate in December. But it is generally believed that there is a great possibility of cutting the repo rate in 2025. According to a recent report by HSBC Research, two cuts of 25 basis points are possible in February and April 2025, due to which the repo rate can come down to 6%. However, in some estimates, there is a possibility of a major reduction in interest rates by 75 to 100 basis points in 2025.