Can home loan rates dip below 8% with RBI reducing repo rate by 25 bps to 6%?
Home loan borrowers are experiencing a positive year in 2025, beginning with a 25 basis point decrease in the repo rate in February by the RBI, followed by the recent cut of 25 bps.
- Apr 9, 2025,
- Updated Apr 9, 2025 1:07 PM IST
The Reserve Bank of India's Monetary Policy Committee (MPC) has announced a 25 bps reduction in repo rates to 6% from 6.25% and has also shifted its stance from 'neutral' to accommodative. With this, it is expected that the home loan rates might go down. So far, home loan borrowers are experiencing a positive year in 2025, beginning with a 25 basis point decrease in the repo rate in February by the RBI. With the fresh deduction in rate, individuals with floating-rate home loans can anticipate a significant decrease in their EMIs as lenders start implementing this rate cut.
At present, home loan interest rates starts at 8.1% for some public sector banks. It is expected that the banks and NBFCs will further slash their home loan rates. This potential adjustment could provide significant relief to prospective homebuyers by making financing conditions more favourable, thus reducing the burden of borrowing costs.
The current environment shows home loans as an essential component of personal finance in many households. With interest rates potentially falling, monthly instalments on these loans may decrease, easing the financial obligations on borrowers. This anticipated move aligns with broader monetary policy objectives aimed at encouraging economic activity by making borrowing more attractive. Such a shift is expected to influence homebuyers considering new loans and those with existing floating rate arrangements, who might benefit from reduced equated monthly instalments (EMIs).
"Many lenders have until now not passed on the benefits of the February repo rate cut of 0.25% to their customers. They change their benchmark rates during quarterly board meetings. This has left many prime borrowers at home loan rates of more than 8.5% still. However, many lenders had started offering attractive rates of around 8.10-8.15% for new borrowers a few days after the Feb rate cut. RBI's rate cut on 9th April should definitely push home loan rates for these proactive lenders below 8% for new borrowers. Existing home loan customers are usually passed on such benefits a little late. So, the dip below 8% for them may be one-quarter out. Nonetheless, it is always advisable to keep track of the benchmark for your home loan, as defined in your loan sanction letter," said Animesh Hardia, Senior Vice President, Quantitative Research at 1 Finance.
"Today’s rate cut is on expected lines. Home loan rates are about to go sub-eight again with today’s 25 bps rate cut. The lowest rates we’re currently seeing are between 8.10 and 8.35. However, the lowest rates are typically reserved for prime borrowers (credit score > 750) and refinance cases. Homeowners paying a substantially higher rate (50 bps or higher above prevalent rates) are advised to refinance their loans to avail lower rates. Do note that automatic, immediate and full rate cuts are available only on repo-linked home loans offered by banks. Despite six years of repo-linking, we see that only 50% of floating rate loans with government banks are still linked to the MCLR and 2% to Base Rate. Borrowers with these banks are advised to take stock of their older loan benchmark and consider a refinance to a repo-linked home loan if it helps them save interest outflows," said Adhil Shetty, CEO of Bankbazaar.com.
Here are the current home loan rates:
Public sector banks, generally the first to adjust their rates following RBI's policy changes, could lead to lowering lending rates. In contrast, private sector banks, which are major competitors, might also react by adjusting their interest rates to remain competitive.
Government-backed lenders Bank of India, Indian Overseas Bank, and Punjab National Bank offer slightly lower interest rates at 8.15% than private banks, reduced from 8.4% in January 2025 to 8.15% as of April 4. For a 50-lakh loan with a 20-year tenure, the EMI would be Rs 42,290.
State Bank of India (SBI) and LIC Housing Finance are two institutions offering competitive home loan rates. SBI currently offers home loan rates starting at 8.25 percent following a 25-bps repo rate cut in February. For example, the EMI on a 50-lakh loan with a 20-year tenure would be around Rs 42,603.
Indian Bank, as well as non-banking financial companies (NBFCs) like LIC Housing Finance and Bajaj Finserv, also offer the same interest rate on their home loans.
Central Bank of India and Union Bank of India currently have the lowest interest rates at 8.10%, a decrease from 8.35% on January 31, 2025, according to BankBazaar. For a Rs 50-lakh home loan with a 20-year tenure, the equated monthly installment (EMI) would amount to Rs 42,134.
PNB Housing Finance is currently offering home loans with interest rates starting at 8.5 percent. For a Rs 50-lakh loan with a 20-year tenure, the EMI will come out to Rs 43,391.
Aditya Birla Housing Finance offers home loans with a minimum interest rate of 8.6 percent. For a Rs 50-lakh loan with a 20-year tenure, the EMI will be Rs 43,708.
Kotak Mahindra Bank starts its home loan rates at 8.65 percent, which is 10 bps lower than the previous rate in January. For a Rs 50-lakh loan with a 20-year tenure, the EMI works out to be Rs 43,867.
HDFC Bank offers home loan interest rates beginning at 8.7 percent, which is 5 bps lower than the rate in January 2025. The EMI for a Rs 50-lakh loan with a 20-year tenure amounts to Rs 44,026.
The Reserve Bank of India's Monetary Policy Committee (MPC) has announced a 25 bps reduction in repo rates to 6% from 6.25% and has also shifted its stance from 'neutral' to accommodative. With this, it is expected that the home loan rates might go down. So far, home loan borrowers are experiencing a positive year in 2025, beginning with a 25 basis point decrease in the repo rate in February by the RBI. With the fresh deduction in rate, individuals with floating-rate home loans can anticipate a significant decrease in their EMIs as lenders start implementing this rate cut.
At present, home loan interest rates starts at 8.1% for some public sector banks. It is expected that the banks and NBFCs will further slash their home loan rates. This potential adjustment could provide significant relief to prospective homebuyers by making financing conditions more favourable, thus reducing the burden of borrowing costs.
The current environment shows home loans as an essential component of personal finance in many households. With interest rates potentially falling, monthly instalments on these loans may decrease, easing the financial obligations on borrowers. This anticipated move aligns with broader monetary policy objectives aimed at encouraging economic activity by making borrowing more attractive. Such a shift is expected to influence homebuyers considering new loans and those with existing floating rate arrangements, who might benefit from reduced equated monthly instalments (EMIs).
"Many lenders have until now not passed on the benefits of the February repo rate cut of 0.25% to their customers. They change their benchmark rates during quarterly board meetings. This has left many prime borrowers at home loan rates of more than 8.5% still. However, many lenders had started offering attractive rates of around 8.10-8.15% for new borrowers a few days after the Feb rate cut. RBI's rate cut on 9th April should definitely push home loan rates for these proactive lenders below 8% for new borrowers. Existing home loan customers are usually passed on such benefits a little late. So, the dip below 8% for them may be one-quarter out. Nonetheless, it is always advisable to keep track of the benchmark for your home loan, as defined in your loan sanction letter," said Animesh Hardia, Senior Vice President, Quantitative Research at 1 Finance.
"Today’s rate cut is on expected lines. Home loan rates are about to go sub-eight again with today’s 25 bps rate cut. The lowest rates we’re currently seeing are between 8.10 and 8.35. However, the lowest rates are typically reserved for prime borrowers (credit score > 750) and refinance cases. Homeowners paying a substantially higher rate (50 bps or higher above prevalent rates) are advised to refinance their loans to avail lower rates. Do note that automatic, immediate and full rate cuts are available only on repo-linked home loans offered by banks. Despite six years of repo-linking, we see that only 50% of floating rate loans with government banks are still linked to the MCLR and 2% to Base Rate. Borrowers with these banks are advised to take stock of their older loan benchmark and consider a refinance to a repo-linked home loan if it helps them save interest outflows," said Adhil Shetty, CEO of Bankbazaar.com.
Here are the current home loan rates:
Public sector banks, generally the first to adjust their rates following RBI's policy changes, could lead to lowering lending rates. In contrast, private sector banks, which are major competitors, might also react by adjusting their interest rates to remain competitive.
Government-backed lenders Bank of India, Indian Overseas Bank, and Punjab National Bank offer slightly lower interest rates at 8.15% than private banks, reduced from 8.4% in January 2025 to 8.15% as of April 4. For a 50-lakh loan with a 20-year tenure, the EMI would be Rs 42,290.
State Bank of India (SBI) and LIC Housing Finance are two institutions offering competitive home loan rates. SBI currently offers home loan rates starting at 8.25 percent following a 25-bps repo rate cut in February. For example, the EMI on a 50-lakh loan with a 20-year tenure would be around Rs 42,603.
Indian Bank, as well as non-banking financial companies (NBFCs) like LIC Housing Finance and Bajaj Finserv, also offer the same interest rate on their home loans.
Central Bank of India and Union Bank of India currently have the lowest interest rates at 8.10%, a decrease from 8.35% on January 31, 2025, according to BankBazaar. For a Rs 50-lakh home loan with a 20-year tenure, the equated monthly installment (EMI) would amount to Rs 42,134.
PNB Housing Finance is currently offering home loans with interest rates starting at 8.5 percent. For a Rs 50-lakh loan with a 20-year tenure, the EMI will come out to Rs 43,391.
Aditya Birla Housing Finance offers home loans with a minimum interest rate of 8.6 percent. For a Rs 50-lakh loan with a 20-year tenure, the EMI will be Rs 43,708.
Kotak Mahindra Bank starts its home loan rates at 8.65 percent, which is 10 bps lower than the previous rate in January. For a Rs 50-lakh loan with a 20-year tenure, the EMI works out to be Rs 43,867.
HDFC Bank offers home loan interest rates beginning at 8.7 percent, which is 5 bps lower than the rate in January 2025. The EMI for a Rs 50-lakh loan with a 20-year tenure amounts to Rs 44,026.