Home Loan Relief: Interest Rates Drop After RBI Cuts Repo Rate — These Banks Now Offer Cheaper Loans

New Delhi – If you're planning to take a home loan, here’s some good news. The Reserve Bank of India (RBI) has reduced the repo rate by 50 basis points (0.50%), bringing it down to 5.5% as of June 7, 2025. This decision is expected to benefit borrowers across the country, especially those with existing or new housing loans.

Since February 2025, the RBI has slashed the repo rate by a total of 1%, making this the second cut in just a few months. As a result, several major banks have already revised their home loan interest rates downward, offering borrowers much-needed financial relief.

What Does the Repo Rate Cut Mean for You?

The repo rate is the interest rate at which the RBI lends money to commercial banks. A cut in this rate means banks can borrow money at a lower cost, and in turn, they are expected to pass on this benefit to customers by reducing lending rates — including those for home loans.

Here’s how it helps you:

• Lower EMIs: If your loan is on a floating interest rate, you may see a reduction in your monthly installments.

• Higher Eligibility: Lower rates may increase your loan eligibility as the interest burden reduces.

• Cheaper New Loans: If you're planning to apply for a home loan, you could now get it at more competitive rates.

Which Banks Have Lowered Interest Rates?

Following the RBI’s repo rate announcement, several prominent public and private sector banks have reduced their home loan interest rates. Though exact rates vary from one institution to another, some banks are now offering loans starting as low as 8.2% per annum for eligible customers with high credit scores.

Banks known to have revised their rates include:

• State Bank of India (SBI)

• HDFC Bank

• Punjab National Bank (PNB)

• ICICI Bank

• Bank of Baroda

Most of these rate changes are applicable to both new borrowers and existing customers under floating rate home loans.

What Should You Do as a Borrower?

If you already have a home loan:

• Check if your loan is linked to the repo rate or an external benchmark.

• Contact your bank to ensure the new rate is reflected in your EMIs.

• Consider a balance transfer to another lender offering lower rates if your bank hasn’t passed on the benefit.

If you're planning to take a new loan:

• Compare offers from multiple banks.

• Negotiate better terms if you have a good credit history and stable income.

• Choose between fixed or floating interest rates wisely based on your financial goals.

Final Word

The RBI's decision to cut the repo rate is a positive step aimed at easing borrowing costs and boosting home ownership. With many banks responding by slashing interest rates, it's a good time for aspiring homeowners to act.

Whether you’re planning to buy a new home or refinance your existing loan, lower interest rates mean more savings and greater affordability.

Stay updated with your bank’s announcements and make sure to explore your options — this rate cut might just be your window to smarter home financing.