HDFC Bank, the largest private sector bank in India, has announced a change in its lending rates.
On January 7, 2025, the bank reduced the Marginal Cost of Funds Based Lending Rate (MCLR) by 0.05% for certain loan tenures.
This change affects loans with overnight, six-month, one-year, and three-year terms. Other loan periods did not see any changes.
New MCLR Rates from January 7, 2025
Overnight MCLR: Reduced to 9.15% from 9.20% (a 0.05% decrease).
One-month MCLR: Stays at 9.20% (no change).
Three-month MCLR: Stays at 9.30% (no change).
Six-month MCLR: Reduced to 9.40% from 9.45% (a 0.05% decrease).
One-year MCLR: Reduced to 9.40% from 9.45% (a 0.05% decrease).
Tenure Above 2 Years: Stays at 9.45% (no change).
Tenure Above 3 Years: Reduced to 9.45% from 9.50% (a 0.05% decrease).
Impact of MCLR Changes on Loans
The MCLR reduction can lower your monthly loan EMI, especially for those with floating interest loans like home loans, car loans, and personal loans.
When the MCLR decreases, the interest rate on loans also falls, which can help reduce monthly payments for both new and existing customers.
For example, if you plan to take a loan for a car or home, the cost may now be lower.
Existing loan customers could also benefit from a small reduction in their monthly EMI payments.
Factors That Affect the MCLR Rate
The MCLR rate depends on factors like the deposit rate, repo rate, operational costs, and the cash reserve ratio.
Changes in the Reserve Bank of India’s repo rate can also influence the MCLR, which directly affects loan interest rates and EMIs.
When the MCLR goes up, loan EMIs increase. But when it goes down, the EMIs for floating rate loan holders reduce.
