If the big EMI of a home loan is taking a toll on your pocket, then there is some relief news for you! After the recent RBI monetary policy meeting, many big banks in the country have decided to cut their home loan interest rates. These include SBI, HDFC Bank, PNB, Bank of Baroda, and Indian Overseas Bank. This cut is going to give a big relief to the existing borrowers, as now their EMI will be reduced.
What is MCLR
The full form of MCLR is Marginal Cost of Funds-based Lending Rate. It is a kind of benchmark rate, on the basis of which banks fix the interest rate of their floating rate loans, such as home loans, personal loans, and car loans. When MCLR decreases, it not only reduces the EMI amount but can also reduce the loan tenure, giving great relief to the existing borrowers.
However, it is important to know that new floating-rate loans are not linked to MCLR, but to EBLR (External Benchmark Lending Rate). Still, banks are giving their old customers the option to switch from MCLR to EBLR.
These 5 banks reduced home loan interest rates
In August 2025, these 5 banks cut interest rates and offered the cheapest home loans to customers. Let’s know which bank has cut how much:
State Bank of India (SBI)
The country’s largest bank has cut its MCLR by 5 basis points. SBI’s MCLR is now between 7.9% to 8.85%, which was earlier 7.95% to 8.9%. These new rates have come into effect from August 15, 2025.
HDFC Bank
The country’s largest private bank, HDFC, has also reduced its MCLR. HDFC Bank’s new MCLR is between 8.55% to 8.75%. This reduction has become effective from August 7, 2025.
Bank of Baroda
The new rates of Bank of Baroda have come into effect from August 12, 2025. The overnight MCLR of the bank has come down from 8.10% to 7.95%. Similarly, the one-month MCLR is now 7.95%, while earlier it was 8.30%. The three-month MCLR is 8.35% and the six-month MCLR is 8.65%. The one-year MCLR of the bank has now become 8.8%.
Punjab National Bank (PNB)
Even before the RBI policy, Punjab National Bank had cut its MCLR by 5 basis points for all tenures on August 1, 2025. The overnight MCLR of the bank is 8.15%, while the one-year MCLR is 8.85% and the three-year MCLR is 9.15%.
Indian Overseas Bank
The new rates of this bank have also come into effect from August 15, 2025. Its overnight MCLR is 8.05%. Apart from this, the month MCLR has become 8.3% and the year MCLR has become 8.9%.
Direct impact on your home loan EMI
The direct benefit of the reduction in interest rate by these banks will be available to those customers whose loans are linked to MCLR. This means that if you have a home, personal, or car loan with these banks, then your EMI can be less than before. This is a big saving opportunity for you. This decision is a relief for lakhs of people who were troubled by the rising EMI, and now they will get a chance to manage their expenses better.