Home Loan Interest Rate: Following the RBI’s reduction in the repo rate, banks began lowering home loan interest rates. Now, six major banks in the country have slashed interest rates on house loans. The Reserve Bank of India (RBI) lowered the repo rate by 25 basis points, or 0.25%, at its Monetary Policy Committee (MPC) meeting on February 7, 2025. This dropped it to 6.25%. This rate has remained steady in the last two years. It has been reduced. Since then, most home buyers have anticipated that banks will lower home loan rates. Following the RBI’s decision, six banks in the country slashed interest rates on house loans.
Many banks, notably Canara Bank, Punjab National Bank (PNB), Union Bank of India, and Bank of Baroda, have lowered their repo related lending rates (RLLR) by 0.25%.
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What is the Repo Linked Lending Rate?
The repo linked lending rate is the interest rate at which banks lend to their customers. This rate is directly connected to the repo rate set by the RBI. In October 2019, the RBI issued a circular instructing banks to link their retail loans to the external benchmark rate. As a result, the repo rate has become most banks’ primary benchmark. Customers who choose RLLR-linked home loans have interest rates that fluctuate in response to fluctuations in the RBI’s repo rate.
Most consumers obtain floating-rate home loan that are tied to the RLLR. Customers can now choose to reduce their EMI or loan duration.
Home Loan Interest Rate: 6 banks reduction in home loan interest rates see here
Banks cut interest rates on lending.
Canara Bank
Canara Bank decreased its RLLR from 9.25% to 9.00%. This new rate will be effective as of February 12, 2025, and will apply to accounts opened on or after that date. Or have spent three years in the RLLR system.
Bank Of Baroda
The Bank of Baroda has changed its Baroda Repo Linked Lending Rate (BRLLR) to 8.90%, effective February 10, 2025.
The Bank of India
Bank of India has lowered its RLLR from 9.35% to 9.10%. This rate is effective February 7, 2025.
Union bank of India
Union Bank of India cut its RLLR from 9.25% to 9.00%. This rate will go effective on February 11, 2025.
The Indian Overseas Bank
Indian Overseas Bank (IOB) has decreased its RLLR by 25 basis points, lowering it from 9.35% to 9.10%. The modification will be applied on February 11, 2025.
Punjab National Bank (PNB)
PNB has also lowered its RLLR from 9.25% to 9.00%. This rate will be in effect beginning February 10, 2025.
How will this affect home loan customers?
Following the RBI’s repo rate cut, the fall in banks’ RLLR will bring assistance to house loan consumers. This will reduce the cost of new home loans and maybe lower the EMI of existing clients. Customers have the option of lowering their EMI or saving interest by shortening their loan duration.
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