In welcome news for homebuyers and existing borrowers, HDFC Bank has reduced its loan interest rates after the Reserve Bank of India (RBI) cut the repo rate. The move is designed to pass on the benefit of lower borrowing costs to customers, either through lower EMIs or shorter loan tenures. For anyone servicing a home loan or planning to borrow, this change can make a meaningful difference to monthly budgets.
Why HDFC Cut Loan Interest Rates
Banks revise lending rates mainly in response to changes in the RBI’s monetary policy. On December 5, 2025, the RBI reduced the repo rate by 25 basis points, bringing it down from 5.50% to 5.25%. This reduced the cost at which banks borrow short‑term funds from the central bank.
In response, HDFC Bank lowered its Marginal Cost of Funds‑based Lending Rate (MCLR) by up to 5 basis points across select tenures. It also sharpened pricing on some externally benchmarked home loan products, allowing borrowers to benefit from cheaper credit.
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HDFC Interest Rates Before and After Repo Rate Cut
To clearly understand the impact, here’s a simple comparison of key rates before and after the repo rate cut.
Interest Rate Comparison Table
| Rate Type | Before Repo Cut (Pre‑Dec 2025) | After Repo Cut (Dec 2025) | Change |
|---|---|---|---|
| RBI Repo Rate | 5.50% | 5.25% | -25 bps |
| HDFC Bank MCLR (Range) | 8.35% – 8.60% | 8.30% – 8.55% | -5 bps |
| Starting Home Loan Rate* | 8.15% | 7.90% | Up to -25 bps |
*Starting rates apply to select products and customers with strong credit profiles.
Also Read: HDFC Personal Loan
What Is EBLR and How It Works at HDFC
Before looking at EMIs, it’s important to understand how loans are benchmarked.
EBLR (External Benchmark Lending Rate) is a lending rate linked to an external reference, most commonly the RBI repo rate. Since October 2019, the RBI has mandated that most new floating‑rate retail loans, including home loans, be linked to an external benchmark.
HDFC Bank’s Adjustable Rate Home Loans (ARHL) are linked to EBLR. When RBI changes the repo rate, the benchmark moves, and the loan interest rate adjusts after the reset period. This system ensures faster and more transparent transmission of policy rate changes to borrowers.
What is RLLR, and how does it differ from MCLR
RLLR (Repo Linked Lending Rate) is a specific type of EBLR where the benchmark is the RBI repo rate.
The typical structure is:
RLLR = Repo Rate + Bank Spread
While HDFC primarily uses EBLR and MCLR, other banks like PNB and Indian Bank use RLLR extensively. The key benefit of RLLR is that any repo rate cut or hike usually passes on to borrowers almost immediately, subject to the reset frequency.
MCLR, on the other hand, is an internal benchmark. It reflects the bank’s cost of funds, operating expenses, and margins. While MCLR is influenced by RBI policy, it does not move one‑to‑one with the repo rate, which is why MCLR cuts are often smaller and slower.
How a Repo Rate Cut Impacts Lending Rates
When RBI cuts the repo rate, the impact flows through the banking system in stages:
First, banks borrow at a lower cost from the RBI.
Second, banks reduce their lending benchmarks—EBLR, RLLR, or MCLR.
Third, borrowers with floating‑rate loans see changes after their reset date.
For borrowers, this usually means:
- Lower EMIs, because the interest component falls
- Or shorter loan tenure, if EMI stays the same
Externally benchmarked loans (EBLR/RLLR) benefit faster than MCLR‑linked loans.
Also Read: Impact of Repo rate Cut on Home Loan
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How Much Can Your EMI Reduce
Even a small rate cut can translate into noticeable savings over time.
For example, on a ₹50 lakh home loan with a 20‑year tenure:
- A 25 bps rate cut can reduce EMI by ₹700–₹900 per month
- Annual savings can range between ₹8,000–₹10,000
- Total interest saved over the loan tenure can run into several lakhs
Exact savings depend on your loan amount, tenure, and reset cycle.
Why Your Credit Score Matters More Than Ever
While benchmark cuts apply broadly, your final interest rate depends heavily on your credit score.
How Credit Score Affects Your Home Loan
- Lower Interest Rates: Borrowers with scores of 800+ usually get the best rates
- Higher Eligibility: Strong scores improve approval chances and loan amounts
- Better Terms: Flexible repayment options and lower spreads
- Joint Loans: A co‑applicant with a strong score can improve overall pricing
HDFC’s advertised starting rate of 7.90% typically applies to borrowers with excellent credit profiles.
Pro tip: Before applying or requesting a rate conversion, clear outstanding dues and avoid new credit enquiries to keep your score strong.
Also Read: Credit Score for Home Loan
What Existing HDFC Borrowers Should Do Now
If you already have a home loan with HDFC Bank:
- Check whether your loan is EBLR‑linked or MCLR‑linked
- Note your interest reset date
- Explore rate conversion options to move to the latest benchmark
- Decide whether to reduce EMI or shorten tenure
Even a small reset can lead to long‑term savings.
What New Borrowers Should Know
For new borrowers, the timing is favourable:
- Lower starting rates improve affordability
- Reduced EMIs increase loan eligibility
- Competition among banks creates better offers
However, compare processing fees, spreads, and reset frequencies, not just the headline rate.
Conclusion
HDFC Bank’s decision to cut loan interest rates after the RBI repo rate reduction is positive news for borrowers. Whether you are an existing customer or planning a new loan, understanding EBLR, RLLR, MCLR, and the role of the repo rate can help you make smarter choices.
Lower rates today can mean lighter EMIs, faster repayment, and meaningful savings over the long term, especially if you maintain a strong credit profile and stay proactive about your loan terms.
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