Home Loan Interest Rate: The Reserve Bank of India (RBI) cut the repo rate by 25 basis points (0.25%) in its Monetary Policy Committee (MPC) meeting on 7 February 2025, bringing it down to 6.25%. This rate was stable in the last 2 years. Now it has been reduced. After this, most home loan buyers are expecting that banks will reduce home loan rates..
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Home Loan Interest Rate: After RBI reduced the repo rate, banks have started reducing home loan interest. Now 6 big banks of the country have reduced interest on home loan. The Reserve Bank of India (RBI) cut the repo rate by 25 basis points i.e. 0.25% in its Monetary Policy Committee (MPC) meeting on 7 February 2025. This reduced it to 6.25%. This rate was stable in the last 2 years. Now it has been reduced. Since then, most home loan buyers are expecting that banks will reduce home loan rates. After this decision of RBI, 6 banks of the country have reduced interest on home loans. Many banks including Canara Bank, Punjab National Bank (PNB), Union Bank of India and Bank of Baroda have also cut their repo linked lending rate (RLLR) by 0.25%.
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What is Repo Linked Lending Rate (RLLR)?
Repo linked lending rate is the rate at which banks lend money to customers. This rate is directly linked to RBI’s repo rate. In October 2019, RBI issued a circular directing banks to link their retail loans to the external benchmark rate (E-BLR). This has made the repo rate the main benchmark for most banks. Customers who choose home loans linked to RLLR have interest rates that increase or decrease according to changes in RBI’s repo rate. Most customers take floating rate home loans, which are linked to RLLR. Now customers have the option to either reduce their EMI or reduce the loan period.
Banks reduced interest rates on loans
Canara Bank
Canara Bank has reduced its RLLR from 9.25% to 9.00%. This new rate will be effective from February 12, 2025 and will be applicable to those accounts which are opened on or after February 12, 2025. Or have completed 3 years in the RLLR system.
Bank of Baroda
Bank of Baroda has revised its Baroda Repo Linked Lending Rate (BRLLR) to 8.90%, which will be effective from February 10, 2025.
Bank of India
Bank of India has reduced its RLLR from 9.35% to 9.10%. This rate has come into effect from February 7, 2025.
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Union Bank of India
Union Bank of India has reduced its RLLR from 9.25% to 9.00%. This rate will be effective from February 11, 2025.
Indian Overseas Bank
Indian Overseas Bank (IOB) has reduced its RLLR by 25 basis points, bringing it down from 9.35% to 9.10%. This change will be effective from February 11, 2025.
Punjab National Bank (PNB)
PNB has also reduced its RLLR from 9.25% to 9.00%. This rate will be effective from 10 February 2025.
What will be the impact on home loan customers?
After the repo rate cut by RBI, the reduction in the RLLR of banks will provide relief to home loan customers. This will make new home loans cheaper and the EMI of existing customers may come down. Customers can reduce their EMI if they want or can save interest by reducing the term of their loan.
