RBI Cuts Repo Rate to 6.25%; Banks Lower Home Loan Interest Rates
RBI Cuts Repo Rate to 6.25%; Banks Lower Home Loan Interest Rates
New Delhi – In a major relief for borrowers, the Reserve Bank of India (RBI) slashed the repo rate by 25 basis points to 6.25% on February 7, 2025—its first rate cut in nearly five years. This move is expected to bring down borrowing costs, particularly for home loan borrowers with floating interest rates.
Impact of Repo Rate Cut on Home Loans
Retail floating-rate home loans approved after October 1, 2019, are linked to an external benchmark, which is typically the repo rate for most banks. As per RBI guidelines, banks must review and adjust their interest rates at least quarterly, ensuring that borrowers receive the benefit of lower lending rates.
Following the repo rate cut, several banks have reduced their home loan interest rates, offering competitive rates to eligible borrowers. Below is a comparative analysis of the latest home loan interest rates from leading banks in India.
Updated Home Loan Interest Rates After Repo Rate Cut
| Bank | Starting Interest Rate | EMI for Rs 1 Lakh (20 years) |
|---|---|---|
| Union Bank of India, Central Bank of India | 8.10% | Rs 843 |
| Bank of Baroda, Canara Bank, Indian Bank, Punjab National Bank | 8.15% | Rs 846 |
| State Bank of India (SBI) | 8.25% | Rs 852 |
| Bank of India | 8.30% | Rs 855 |
| IDBI Bank | 8.50% | Rs 868 |
| Axis Bank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank | 8.75% | Rs 884 |
| Yes Bank | 9.00% | Rs 900 |
Source: BankBazaar.com, as of February 17, 2025
Key Takeaways for Borrowers
- Lower EMIs: Borrowers with floating-rate home loans linked to the repo rate will see a reduction in their EMIs as banks pass on the benefit.
- Rate Revisions: Banks are required to review and adjust rates at least once every three months based on RBI’s directives.
- Eligibility Matters: The lowest rates are available to eligible borrowers, with factors like credit score, income, and loan amount affecting the final rate.
Final Note
Homebuyers looking to finance their property purchases can benefit from reduced interest rates, making it an opportune time to apply for home loans. However, borrowers should compare rates and check their eligibility before finalizing their loan agreement.
Disclaimer: The rates mentioned above are subject to change and may vary based on individual borrower profiles.
