New Delhi: Home loan borrowers may finally have something to cheer about! Several leading banks, including HDFC Bank, Bank of Baroda, Punjab National Bank, Indian Overseas Bank, and Bank of India have reduced their MCLR (Marginal Cost of Funds-based Lending Rate) for select tenures this September. This move could ease the burden of EMIs or help shorten loan tenures for many borrowers.
MCLR vs EBLR: Key Facts for Borrowers
MCLR, or the Marginal Cost of Funds-based Lending Rate, is the benchmark rate banks use to decide interest rates on floating-rate loans taken before October 2019. A cut in MCLR can directly reduce monthly EMIs or help borrowers close their loans faster. Most new loans today are linked to the External Benchmark Lending Rate (EBLR), which changes with the RBI’s repo rate. Borrowers still on MCLR can also switch to EBLR by paying a one-time conversion fee.
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HDFC Bank Loan Rates
HDFC Bank has kept its overnight and one-month MCLR steady at 8.55 per cent, while the three-month rate remains at 8.60 per cent. However, borrowers may get slight relief as the six-month and one-year MCLR have been cut by 5 basis points, from 8.70 per cent to 8.65 per cent. The two-year rate is also down by 5 basis points to 8.70 per cent, while the three-year MCLR stays unchanged at 8.75 per cent.
SBI Lending Rates
State Bank of India (SBI) has made no changes to its lending rates. Its MCLR currently ranges between 7.90 per cent and 8.85 per cent, depending on the loan tenure. The overnight and one-month rates are 7.90 per cent, the three-month is 8.30 per cent, six-month is 8.65 per cent, one-year is 8.75 per cent, two-year is 8.80 per cent, and three-year is 8.85 per cent.
Bank of Baroda
From September 12, 2025, Bank of Baroda has lowered some of its MCLR rates. The overnight rate is down by 10 basis points to 7.85 per cent, while the three-month rate has been cut by 15 basis points to 8.20 per cent. Other key tenures — one-month (7.95 per cent), six-month (8.65 per cent), and one-year (8.80 per cent) — remain unchanged.
Indian Overseas Bank
Indian Overseas Bank (IOB), effective September 15, 2025, has reduced several MCLR rates. The overnight rate is down by 5 basis points to 8.00 per cent, while the one-year, two-year, and three-year rates have also been cut by 5 basis points each, now standing at 8.85 per cent, 8.85 per cent, and 8.90 per cent respectively. Shorter tenures such as one-month (8.30 per cent), three-month (8.45 per cent), and six-month (8.70 per cent) remain unchanged.
IDBI Bank
IDBI Bank has kept its MCLR rates steady as of September 12, 2025. The overnight rate is 8.05 per cent, one-month is 8.20 per cent, three-month is 8.50 per cent, and six-month is 8.70 per cent. For longer tenures, the one-year stands at 8.75 per cent, two-year at 9.30 per cent, and three-year at 9.70 per cent.
Punjab National Bank (PNB)
From September 1, 2025, PNB has reduced MCLR rates across several tenures. The overnight rate is down by 15 basis points to 8 per cent, the one-month has been cut to 8.25 per cent and the three-month is now 8.45 per cent The six-month MCLR has dropped to 8.65 per cent the one-year to 8.80 per cent, and the three-year to 9.10 per cent.
Bank of India
Bank of India has also reduced its MCLR rates across almost all tenures by 5–15 basis points, except for the overnight rate, which remains unchanged. The revised rates took effect from September 1, 2025.
What Borrowers Should Do Now
If your home loan is linked to MCLR, you may notice lower EMIs once your loan resets to the new rate. Borrowers with older loans can also think about switching to EBLR-linked loans, which usually pass on RBI’s rate cuts more quickly. However, it’s important to weigh the one-time conversion fee before making the switch.
With inflation cooling and lending rates starting to ease, September could finally offer some relief to households that have been stretched by high EMIs over the past year.