# HDFC Bank Slashes MCLR by 5 Bps: What It Means for Your Home Loan EMI

> HDFC Bank has reduced its Marginal Cost of Funds-based Lending Rates (MCLR) by 5 basis points, effective from July 7, 2026. This adjustment will specifically impact borrowers with loans linked to the older MCLR benchmark rather than the current repo-linked rates.

**Type:** article · **Category:** Money · **Published:** 2026-07-09 · **Source:** TrendKia
**Canonical:** https://trendkia.com/en/money/hdfc-bank-ka-bara-kadama-mclr-daron-men-5-besisa-pointsa-ki-katauti-janie-homa-lona-emi-para-kya-hoga-asara-5988 · **Language:** English
**Tags:** HDFC Bank, Home Loan, EMI, MCLR, Interest Rate, RBI

**HDFC Bank**, India's largest lender by market capitalization, has announced a reduction in its Marginal Cost of Funds-based Lending Rates (MCLR) by 5 basis points across several tenures. These revised rates officially came into effect on July 7, 2026. This adjustment holds particular significance for borrowers whose home, personal, or car loans are still pegged to the MCLR framework.

## New Rates and Affected Tenures
The bank has lowered its MCLR for overnight, one-month, three-month, and six-month tenures by 5 basis points. Following this revision, the interest rates for both the overnight and one-month tenures now stand at 8.05% each. It is important to note, however, that the Indian banking sector has largely moved toward external benchmark lending rates, which are directly tied to the **RBI** policy repo rate. Since **HDFC Bank** has not altered its external benchmark rates, only a specific segment of borrowers will see their interest costs change.

## The Transition from MCLR to Repo-Linked Rates
The Reserve Bank of India (**RBI**) introduced the MCLR on April 1, 2016, as an internal benchmark for pricing all floating-rate rupee loans. However, to ensure more effective transmission of monetary policy, the central bank mandated a shift to external benchmarks starting October 1, 2019, which effectively linked retail loans to the repo rate. Existing credit limits and loans previously linked to MCLR, Base Rate, or BPLR are permitted to continue under those frameworks until the time of repayment or renewal.

## Current Home Loan Interest Rate Structure
At present, **HDFC Bank** offers home loan interest rates ranging from 7.75% to 13.20% for both salaried and self-employed applicants. These rates are calculated based on the policy repo rate, which is currently fixed at 5.25%. The final interest rate is determined by adding a spread of 2.50% to 7.95% to the repo rate. In mathematical terms, this means 5.25% (repo rate) + 2.50% to 7.95% (spread) results in the final range of 7.75% to 13.20%.

## Key Factors Influencing Your Interest Rate
According to **HDFC Bank**, several critical variables influence the interest rate offered to a borrower. Your credit score is perhaps the most significant factor, as a higher score indicates greater creditworthiness and often leads to more competitive rates. The total loan amount and the loan-to-value ratio also play a role, as lower borrowing ratios can attract better deals. Furthermore, the choice between fixed and floating interest rates, the stability of your income and employment history, and the broader macroeconomic climate within India significantly dictate the final terms of the loan.

## How EMI Calculation Works
Equated Monthly Installments (EMI) consist of both the principal repayment and the interest charges on your outstanding loan balance. As noted on the **HDFC Bank** website, opting for a longer tenure, which can extend up to 30 years, helps to lower the individual monthly payment. The interest rate is applied monthly to the outstanding principal. To illustrate, if a borrower takes a loan of ₹10,00,000 at an annual interest rate of 7.2% for a term of 120 months (10 years), the EMI is calculated using the formula: ₹10,00,000 * 0.006 * (1 + 0.006)^120 / ((1 + 0.006)^120 - 1), resulting in a monthly payment of ₹11,714.

## What this means for you
**Across India:** Borrowers with loans linked to MCLR may see a slight reduction in their monthly EMIs, while those on repo-linked loans will experience no change in their repayment obligations.

## Questions & Answers

### 1. Will all home loan borrowers benefit from this rate cut?
No, this reduction only applies to borrowers whose loans are linked to the MCLR benchmark. Loans linked to the external repo rate will remain unaffected.

### 2. When did the new rates become effective?
The revisions to the MCLR rates by HDFC Bank became effective starting from July 7, 2026.

### 3. How much has the bank reduced the rates by?
The bank has reduced MCLR rates by 5 basis points across several tenures, including overnight and one-month categories.

### 4. How is a home loan EMI calculated?
The EMI is calculated based on the principal repayment and the interest charged on the outstanding loan amount, determined by the annual interest rate.

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