**Major Relief for Short-Term Borrowers**
While the bank has delivered a blow to long-term borrowers on one hand, it has simultaneously offered significant relief to those seeking smaller or short-term loans on the other. The bank has reduced the MCLR for tenures ranging from overnight to six months by 0.05 percent. This decision will directly benefit companies and merchants who avail of short-term loans for working capital requirements or for business expansion. Following this adjustment, the one-month rate has dropped from 8.10% to 8.05%. Similarly, the three-month rate now stands at 8.15%, and the six-month MCLR has come down to 8.30%.
**No Change in 1-2 Year Rates**
Amidst these adjustments, the bank has made no changes whatsoever to the MCLR rates for the one-year and two-year tenures. For customers, the one-year rate remains steady at 8.35%, and the two-year rate remains unchanged at 8.45%. Following these latest revisions, the bank's overall MCLR rates now range between 8.05% and 8.60%.
**What is MCLR?** Often, technical banking terminology lies beyond the comprehension of the common person. Simply put, the MCLR (Marginal Cost of Funds-based Lending Rate) is the minimum interest rate below which no bank can extend loans to its customers. The Reserve Bank of India (RBI) implemented this mechanism in 2016 to ensure that customers could benefit from changes in interest rates fairly and transparently. Banks determine this rate by taking into account the cost of raising funds from the market, their operational expenses, and other financial parameters. This is precisely why the rate is set differently for various tenures, thereby maintaining a balance between the market and the customers.
Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
HDFC Bank has revised its Marginal Cost of Funds-Based Lending Rate (MCLR), effective May 7, 2026.
The Rate Changes at a Glance
The bank adjusted its rates by 5 basis points (0.05%) in both directions:
| Tenor | New Rate (May 7) | Previous Rate | Change |
| Overnight | 8.05% | 8.10% | ↓ 0.05% |
| 3-Month | 8.15% | 8.20% | ↓ 0.05% |
| 6-Month | 8.30% | 8.35% | ↓ 0.05% |
| 1-Year | 8.35% | 8.35% | No Change |
| 3-Year | 8.60% | 8.55% | ↑ 0.05% |
How This Affects Your Home Loan EMI
The impact on your pocket depends on which benchmark your loan is linked to:
MCLR-Linked Loans: If your home loan is linked to the 3-year MCLR, your interest rate will rise by 0.05% at your next "reset date." While 5 bps sounds small, on a large principal like ₹50 Lakhs over 20 years, this can add up to thousands of rupees in extra interest over the life of the loan.
Repo-Linked Loans (EBLR): Most new home loans (post-2019) are linked to the RBI Repo Rate (currently at 5.25%).
Since the RBI has not changed the repo rate recently, these borrowers will not see an immediate increase in their EMIs due to this specific MCLR move. New Applicants: HDFC Bank has reportedly discontinued its lowest starting rate of 7.15% for new customers, with the new floor starting at 7.20% for those with high CIBIL scores (800+).
Why the Increase?
Despite the RBI holding steady on national rates, banks often adjust their internal MCLR based on their own cost of funds (how much it costs them to get money from depositors) and liquidity needs. The hike in the 3-year rate suggests the bank is seeing higher costs for maintaining long-term capital.
Tip: Check your latest loan statement to see if your "Reset Period" is coming up. If your EMI is becoming significantly more expensive, you might consider a Balance Transfer to a bank offering a lower Repo-Linked rate or negotiating with the bank based on a high CIBIL score.
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