RBI Cuts Repo Rate to 6.25% – Home Loans to Get Cheaper
In good news for borrowers, the Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points to 6.25% on February 7, 2025—the first cut in nearly five years. This will help lower loan interest rates, especially for those with floating-rate home loans.
How This Affects Home Loans
- Home loans taken after October 1, 2019, are linked to an external benchmark (mostly the repo rate).
- As per RBI rules, banks must update their interest rates at least once every three months, so borrowers will see lower rates soon.
- After this rate cut, many banks have reduced home loan interest rates to stay competitive.
Latest Home Loan Interest Rates
| Bank | Starting Interest Rate | EMI for ₹1 Lakh (20 years) |
|---|---|---|
| Union Bank, Central Bank | 8.10% | ₹843 |
| Bank of Baroda, Canara Bank, Indian Bank, PNB | 8.15% | ₹846 |
| State Bank of India (SBI) | 8.25% | ₹852 |
| Bank of India | 8.30% | ₹855 |
| IDBI Bank | 8.50% | ₹868 |
| Axis Bank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank | 8.75% | ₹884 |
| Yes Bank | 9.00% | ₹900 |
| 📌 Source: BankBazaar.com (as of February 17, 2025) |
What This Means for Borrowers
✅ Lower EMIs: Borrowers with floating-rate loans will pay less each month as banks adjust rates.
✅ Rate Adjustments: Banks must revise rates every three months to reflect changes.
✅ Eligibility Matters: The best interest rates are given to borrowers with good credit scores, stable income, and suitable loan amounts.
Final Thoughts
If you’re planning to buy a home, this is a good time to apply for a loan as interest rates are lower. However, compare different banks’ rates and check your eligibility before making a decision.
🔹 Note: Interest rates may change based on individual borrower profiles.
