The cut in MCLR rates will have a direct impact on the EMIs of old floating rate loans like home loans, personal loans and business loans which are linked to MCLR. Due to reduction in MCLR rates, EMI on these loans will also reduce.
HDFC Bank, the country’s largest private bank, has given a special gift to the people of the country on the New Year. The bank has given great relief by reducing the EMI of home loan and car loan. According to the information, HDFC Bank has reduced MCLR by 5 basis points. After this cut, HDFC Bank MCLR is now between 9.15 percent to 9.45 percent.
The revised rates are effective from January 7, 2025. Lower MCLR reduces the loan interest rate, resulting in lower EMIs and lower borrowing costs. The cut in MCLR rates will have a direct impact on the EMIs of old floating rate loans like home loans, personal loans and business loans which are linked to MCLR. Due to reduction in MCLR rates, EMI on these loans will also reduce.
What is MCLR?
Overnight MCLR has been reduced by 5 bps from 9.20 percent to 9.15 percent. There is no change in one month MCLR and the interest rate will remain 9.20 percent. MCLR has been kept only at 9.30 percent for three months. Six-month and one-year MCLR have been reduced by 5 bps from 9.50 per cent to 9.45 per cent and two-year MCLR has been kept unchanged at 9.45 per cent. The three-year MCLR has been reduced by 5 bps from 9.50 percent to 9.45 percent.
Tenure MCLR
overnight 9.15%
1 month 9.20%
3 months 9.30%
6 months 9.40%
1 year 9.40%
2 years 9.45%
3 years 9.45%
Source: HDFC Bank website
HDFC Bank BPLR and EBLR
HDFC Bank’s benchmark prime lending rate is 17.95 per cent per annum, effective from September 9, 2024. The applicable base rate is 9.45 percent and will be effective from September 9, 2024. If we talk about the new home loan interest rates of HDFC Bank, then they are linked to the repo rate. The interest rate on Adjustable Rate Home Loan (ARHL) is linked to HDFC Bank’s External Benchmark Lending Rate (EBLR), which is based on the repo rate. The interest rate for ARHL may vary throughout the loan tenure.
How much are interest rates likely to fall in 2025?
Although the RBI did not make any change in the repo rate in the December policy meeting, the central bank may do so in the next policy meeting in 2025. A report by HSBC Research says that the repo rate may be cut by 0.25 percent in the month of February. Whereas there may be a reduction of 50 basis points in the entire year. That means the repo rate has come down to 6 percent. The future interest rate scenario is still uncertain. Some experts do not see the possibility of a rate cut in the next few quarters. However, others forecast a decline of more than 50 basis points in 2025. Japanese investment bank Nomura expects the RBI to cut interest rates by 1 percent in 2025.
