The Reserve Bank of India (RBI) recently reduced the repo rate by 25 basis points to 6.25% on February 7, 2025—its first cut in nearly five years. This decision is expected to bring much-needed relief to loan borrowers, particularly those with home loans.
Since October 1, 2019, all retail floating-rate loans have been linked to an external benchmark, with most banks choosing the RBI’s repo rate. As a result, banks are required to pass on the full benefit of the rate cut to borrowers. As per RBI regulations, banks must review and adjust their interest rates at least once every quarter, though some may implement changes sooner based on individual loan agreements.
With the latest 25 bps repo rate cut, several banks have reduced their home loan interest rates. Below is an overview of the banks offering the most competitive rates post-cut. Note that these rates are indicative and may vary based on factors such as credit score, income, and loan eligibility.
According to BankBazaar.com, for a home loan of Rs 1 lakh with a tenure of 20 years, leading banks are offering interest rates between 8.10% and 9.00% (data as of February 17, 2025, sourced from official bank websites).
| Bank | Starting Interest Rate (%) | EMI (Rs 1 Lakh, 20 Years) |
|---|---|---|
| Union Bank of India | 8.10 | 843 |
| Central Bank of India | 8.10 | 843 |
| Bank of Baroda | 8.15 | 846 |
| Punjab National Bank | 8.15 | 846 |
| Canara Bank | 8.15 | 846 |
| Indian Bank | 8.15 | 846 |
| State Bank of India | 8.25 | 852 |
| Bank of India | 8.30 | 855 |
| IDBI Bank | 8.50 | 868 |
| HDFC Bank | 8.75 | 884 |
| Axis Bank | 8.75 | 884 |
| Kotak Mahindra Bank | 8.75 | 884 |
| ICICI Bank | 8.75 | 884 |
| Yes Bank | 9.00 | 900 |
Note: The lowest rates quoted here are applicable only to eligible borrowers opting for floating-rate loans. Data last updated on February 17, 2025.
The latest repo rate cut brings a golden opportunity for homebuyers to secure lower interest rates and reduce their overall borrowing costs. Whether you’re a first-time homebuyer or planning to refinance your existing home loan, choosing the right lender can make a significant difference in your long-term financial commitments.
If you’re planning to take advantage of these lower rates, compare lenders, check eligibility requirements, and apply for the best home loan deal suited to your financial needs.
