HDFC Bank Cuts MCLR by 5 Bps From July 7, 2026: Will Home Loan EMIs Reduce?

9 Jul 2026 , 12:18 PM

HDFC Bank, India’s largest bank by market capitalization, has reduced its Marginal Cost of Funds-based Lending Rate (MCLR) by 5 basis points (bps) across select loan tenures, with the revised rates coming into effect from July 7, 2026.

The move is expected to benefit borrowers with loans linked to MCLR, including certain home loans, personal loans, and car loans. However, most newer borrowers are unlikely to see any immediate relief as their loans are linked to the RBI’s policy repo rate.

Investor sentiment remained positive following the announcement. Shares of HDFC Bank were trading 1.18% higher during the session, touching an intraday high of ₹820.85, reflecting optimism over the lender’s lending rate revision and broader banking sector outlook.

HDFC Bank Revises MCLR Across Select Tenures

HDFC Bank has reduced MCLR by 5 basis points on the following tenures:

• Overnight MCLR: 8.05%
• One-month MCLR: 8.05%
• Three-month MCLR: 8.20%
• Six-month MCLR: 8.35%

The bank has kept the longer-tenure MCLR rates unchanged:

• One-year MCLR: 8.45%
• Two-year MCLR: 8.55%
• Three-year MCLR: 8.70%

The revised rates are effective from July 7, 2026.

Will Your Home Loan EMI Reduce?

The MCLR cut does not automatically mean lower EMIs for every home loan borrower.

Borrowers with older floating-rate loans linked to MCLR may benefit from the reduction once their loan reaches its interest rate reset date. Depending on the outstanding loan amount and tenure, even a small reduction in interest rates can lead to lower monthly EMIs or a shorter repayment period.

However, borrowers whose home loans are linked to the External Benchmark Lending Rate (EBLR) or the RBI’s policy repo rate are unlikely to see any immediate change, as HDFC Bank has not revised its external benchmark lending rate.

Why Most Borrowers Won’t Be Impacted

The Reserve Bank of India introduced the Marginal Cost of Funds-based Lending Rate (MCLR) framework on April 1, 2016, requiring banks to price floating-rate rupee loans using MCLR as the internal benchmark.

Later, on October 1, 2019, the RBI directed banks to shift new floating-rate retail and MSME loans to External Benchmark Lending Rates (EBLR), primarily linked to the policy repo rate, to ensure faster transmission of monetary policy changes.

As a result, only borrowers who continue to have loans linked to MCLR, Base Rate, or BPLR are likely to benefit from the latest revision. Existing loans under these older benchmarks will continue until repayment or renewal.

Current HDFC Bank Home Loan Interest Rates

HDFC Bank currently offers home loan interest rates ranging from 7.75% to 13.20% for both salaried and self-employed borrowers.

These rates are linked to the RBI’s policy repo rate, which currently stands at 5.25%. The final lending rate is determined by adding a spread ranging from 2.50% to 7.95%, resulting in the applicable home loan interest rate.

Since the repo rate remains unchanged, there has been no change in HDFC Bank’s home loan rates linked to the external benchmark.

What Borrowers Should Do

Borrowers should check whether their loan is linked to MCLR or the repo rate before expecting any reduction in EMIs.

Customers with older MCLR-linked loans may see some benefit after their loan reset date, while borrowers with repo-linked loans will have to wait for any future change in the RBI’s policy repo rate or the bank’s external benchmark lending rate.

Although the latest MCLR cut is modest, it reflects HDFC Bank’s efforts to fine-tune lending rates and could provide limited relief to eligible borrowers.

While the latest MCLR cut offers modest relief for borrowers with older MCLR-linked loans, the majority of home loan customers whose loans are linked to the external benchmark lending rate will not see an immediate reduction in EMIs. Nevertheless, the announcement was well received by investors, with HDFC Bank shares rising 1.18% to an intraday high of ₹820.85, indicating positive market sentiment towards the bank’s lending strategy and financial outlook.

 

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