A gift before the new year: This major government bank has reduced interest rates on home loans..

Home Loans: A few days before the new year, another public sector bank has given a gift to its customers. Union Bank of India has announced a reduction in interest rates on select retail loan products, effective December 18, 2025, which are lower than the previously applicable rates. Interest rates have been reduced for retail borrowers on home loans, vehicle loans, and personal loans.

How much cheaper are home loans?
Home loan interest rates have been reduced by 30 basis points and will now start at 7.15% per annum, compared to the previous rate of 7.45% per annum. Vehicle loan interest rates have been reduced by 40 basis points and will now start at 7.50% per annum, compared to the previous benchmark rate of 7.90% per annum.

The revised rates are effective from December 18, 2025, and are subject to customer eligibility, credit profile, and other applicable terms and conditions.

Personal loan interest rates have seen a more significant reduction of 160 basis points, bringing the rates down from the previous 10.35% per annum to start at 8.75% per annum. In addition to the base rate reduction, Union Bank of India is offering an extra discount of 0.10% per annum on eligible Green Finance home loans and vehicle loans.

Impact of RBI's Repo Rate Cut
This change comes in light of the easier monetary conditions during the year. The Reserve Bank of India (RBI) reduced the repo rate by 25 basis points to 5.25% on December 5, 2025, which was the fourth rate cut in 2025, bringing the total reduction for the year to 125 basis points. The central government had also eased GST norms for the automotive sector.

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