Home Loan EMIs Set To Drop For These Borrowers As Banks Cut Lending Rates

Several banks, such as HDFC Bank and Bank of Baroda (BoB), have cut their marginal cost of funds-based lending rates (MCLR) in October for select tenures. Following the revision of the MCLR, borrowers with floating-rate loans tied to this benchmark can expect a reduction in their EMIs. This provides much-needed relief on repayments.

The rate cuts come in the wake of the Reserve Bank of India’s (RBI) October 2025 Monetary Policy Committee (MPC) meeting, where the Central bank opted to keep the repo rate steady at 5.50%, adopting a neutral outlook.

Bank of Baroda, HDFC Bank, Indian Bank, and IDBI Bank have reduced their short-term MCLR rates, potentially leading to reduced monthly repayments or shorter loan durations for customers with floating rate loans linked to the MCLR.

The MCLR acts as a reference rate that banks use to set interest rates on various floating loans, including home, personal, and car loans. When the MCLR falls, it can lead to reduced monthly EMIs or a shorter loan repayment period, offering financial advantage to borrowers.

The MCLR does not apply to fresh loans, as new floating rate loans are now linked to the External Benchmark Lending Rate (EBLR). Borrowers who currently have loans linked to the MCLR also have the option to switch their loans to an EBLR-based rate.

The bank has updated its MCLR effective Oct. 12. According to the bank’s official website, the overnight MCLR remains steady at 7.85%, while the one-month MCLR has been reduced slightly from 7.95% to 7.90%. The three-month MCLR holds at 8.20%, and the six-month rate has been lowered from 8.65% to 8.60%. Additionally, the one-year MCLR has been brought down from 8.80% to 8.75%.

IDBI Bank has updated its MCLR rates effective Oct. 12. The overnight MCLR has been lowered from 8.05% to 8%, while the one-month MCLR has seen a slight reduction from 8.20% to 8.15%. Rates for other tenures remain unchanged, with the three-month MCLR at 8.50% and the six-month rate at 8.70%. Longer-term rates will also stay steady, with the one-year MCLR at 8.75%, the two-year at 9.30%, and the three-year at 9.70%.

The bank has adjusted its MCLR for specific tenures, effective Oct. 3. The overnight MCLR has been lowered from 8.05% to 7.95%, and the one-month rate has been decreased marginally from 8.30% to 8.25%. The three-month, six-month, and one-year MCLR remain unchanged at 8.45%, 8.70%, and 8.85%, respectively.

HDFC Bank has trimmed its MCLR across various tenures, effective Oct. 7. The overnight MCLR has been reduced from 8.55% to 8.45%, while the one-month rate has been cut from 8.55% to 8.40%. The three-month MCLR saw a 15-basis point reduction, falling from 8.60% to 8.45%. Both the six-month and one-year rates have been lowered by 10 basis points each, now standing at 8.55%. 

Longer tenures have also seen reductions, with the two-year MCLR decreasing from 8.70% to 8.60% and the three-year rate dropping from 8.75% to 8.65%.