Home Loan Interest Rate: There is good news for borrowers as various large banks in India lowered the home loan interest rate. These banks, including Canara Bank, Punjab National Bank (PNB), Union Bank of India, Bank of Baroda, Bank of India, and Indian Overseas Bank are slashing their Repo Linked Lending Rates (RLLR). This move should help reduce the burden of monthly EMI costs on borrowers, or let them reduce their term loan.
Repo Rate Cut from RBI to Keep Rates Lower
This is taking place after a rate cut was announced earlier this month by the Reserve Bank of India (RBI) which lowered the repo rate by 25 basis points during the Monetary Policy Committee (MPC) meeting held on 7 February 2025. The repo rate is at 6.25%, which is now cheaper for banks to borrow. Hence, banks can pass this on in the form of reduced rates to home loan customers.
Major Banks Announced Revised RLLR Rates
A host of the major banks that have revised their RLLR rates include:
Canara Bank: RLLR slashed from 9.25% to 9.00% with effect from February 12.
Bank of Baroda: RLLR rate is 8.90% effective from February 10.
Bank of India: slashed basic loan rates from 9.35% to 9.10% from February 7.
Union Bank of India: New RLLR rate is 9.00%, down from 9.25% effective from February 11.
PNB: The rate has been cut to 9.00%, valid from February 10, 2025.
Indian Overseas Bank: Revised RLLR down from 9.35% to 9.10%, effective February 11, 2025.
Understanding RLLR and Its Impact
The Repo Linked Lending Rate (RLLR) is the interest rate banks will lend to their customers, which is directly connected to the repo rate, which the RBI fixes. Since October 2019, the RBI has asked banks to link their retail loan products to an external benchmark, where almost all banks have opted for the repo rate as the preferred benchmark. Any changes applied to the repo rate are directly translated to the RLLR, affecting the interest rate for floating-rate home loans.
How Old and New Borrowers Are Affected
New Borrowers- Those planning to take a home loan would benefit immediately from the lower RLLR rates in terms of either a lower EMI or greater borrowing capacity.
Existing Borrowers- Current floating-rate home loan borrowers will benefit from the reduction in the next interest revision of their loans, which is usually made every 3-6 months.
Is It a Good Time for a Home Loan?
For those considering a home loan, this could be an opportune time. With a reduction in interest rates, borrowers can save a lot in terms of their EMIs or repay their loans in a much smaller tenor, with no additional financial burden. In addition, banks might offer new customer deals.
Effect of the Repo Rate Cuts on Borrowers
The reduction of interest rates on home loans by several big banks is a very refreshing note for the borrower. This is a big booster for new and existing borrowers since it means that those searching for a home will be safe from financial difficulties. If you have thought of taking out a home loan, now is the time to make a move and take advantage of these beneficial deals.
