The Reserve Bank of India (RBI) has recently cut the repo rate by 25 basis points to 6.25%. This decision is a relief news for home loan borrowers, as it will reduce interest rates and reduce monthly installments (EMI).
Why Do Banks Reduce Home Loan Rates After Repo Rate Cuts? As per RBI rules, all floating rate loans taken after October 1, 2019 are linked to an external benchmark, which in most cases is the repo rate. That is, when RBI reduces the repo rate, banks also have to cut interest rates.
After this cut, many banks have cut their H-loan interest rates drastically. Let us know which banks are offering the cheapest home loans now.
Cheapest Home Loan Interest Rates (February 2025)
1. Union Bank of India & Central Bank of India – Starting at 8.10%
2. Bank of Baroda, Canara Bank, Indian Bank and Punjab National Bank – Starting from 8.15%
3. State Bank of India (SBI) – Starting from 8.25%
4. Bank of India – Starting from 8.30%
5. IDBI Bank – Starting from 8.50%
6. HDFC Bank, ICICI Bank, Kotak Mahindra Bank and Axis Bank – Starting from 8.75%
7. Yes Bank – Starting from 9.00%
Where is the cheapest loan?
If you are thinking of taking a home loan, then Union Bank of India and Central Bank of India are currently offering loans at the lowest interest rates. However, the final interest rate of the loan will depend on your credit score, income and other factors.
Factors That Affect Your Loan Interest Rate
- The reduction in interest rates will reduce the EMI of home loan borrowers.
- Banks have to review interest rates every quarter, so more banks may soon cut their rates.
Is This the Right Time to Take a Home Loan?
If you want to take advantage of the low interest rate on home loans, then this could be the right time. The cut in repo rate has not only made home loans cheaper, but there are also indications that the real estate market may boom in the coming months.
