The Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points from 6.50% to 6.25% in its monetary policy review as announced on February 7, 2025. After the RBI repo rate cut, banks such as SBI, Canara Bank, PNB, and Union Bank among others have cut their repo linked lending rates. Most other banks are also expected to cut their lending rates in line with the RBI rate cut.
Also read: Lower EMI for home loan borrowers of Canara Bank, PNB, Union Bank and others as these banks cut repo linked lending rates
After banks cut their lending rates, their home loan borrowers will have to pay less interest. Normally, when a lender cuts the lending rate, borrowers get two options: Either to go for a reduction in EMIs or reduce the tenure of the loan. The second option will help the borrowers clear their home loan outstanding faster.
Also read: Big relief for home loan borrowers as EMIs to fall by 1.8% on a 20 year loan tenure as RBI reduced repo rate by 25 bps
In case, the borrower goes for reduction in EMI then the lower lending rate of the lender would mean lower Equated Monthly Installment (EMI) for borrowers. EMI is the amount you will pay on a specific date each month till the loan is repaid in full.
What is a repo rate-linked home loan?
A repo rate-linked home loan is a floating-rate home loan where the interest rate is directly tied to the RBI’s repo rate.
Latest interest rates of top banks for home loans above Rs 75 Lakh (As on February 26, 2025)
| Lending rate | |
| PUBLIC SECTOR BANKS | Loan Rates in % |
| State Bank of India | 8.25-9.40 |
| Bank of Baroda | 8.40-10.65 |
| Union Bank of India* | 8.10-10.65 |
| Punjab National Bank | 8.15-9.90 |
| Bank of India | 8.30-10.85 |
| Canara Bank** | 8.15-10.90 |
| UCO Bank | 8.30 onwards |
| Bank of Maharashtra | 8.10-10.90 |
| Punjab and Sind Bank | 8.35-9.85 |
| Indian Overseas Bank | 8.15-10.75 |
| Indian Bank | 8.15-9.55 |
Lending rate of private sector banks
| Kotak Mahindra Bank | 8.75 onwards |
| ICICI Bank | 8.75 onwards |
| Axis Bank | 8.75-9.65 |
| HSBC Bank | 8.50 onwards |
| South Indian Bank | 8.50 onwards |
| Karur Vysya Bank | 8.75-11.70 |
| Karnataka Bank | 8.79-9.44 |
| Federal Bank | 8.55 onwards |
| Dhanlaxmi Bank | 8.75 onwards |
| Tamilnad Mercantile Bank | 8.60-9.95 |
| Bandhan Bank | 9.16-13.33 |
| RBL Bank | 9.00 onwards |
| CSB Bank | 10.24-12.09 |
| HDFC Bank Ltd. | 8.70 onwards |
| City Union Bank | 10.15-14.05 |
Source: Paisabazaar data
*Extra Interest rate concession of 5 bps to borrowers opting for insurance policy and extra 0.10% on green home projects.
**0.05% interest rate concession for balance transfer/ready to move proposals, Govt./PSUs/Top Corp. employees and salary account holders.
What should existing home loan borrowers do now
Lenders are likely to offer you the option to go for an EMI cut or for a tenure cut following the RBI’s repo rate cut. In such a case, it will be a better option for you to go for a tenure cut by keeping the EMI unchanged as it will save you on the total interest amount.
