Bank New Repo Rate Cuts: The Reserve Bank of India recently cut the repo rate by 25 basis points and moved it from 5.50% to 5.25%. This small change has started a big wave of hope among people who want cheaper home loans. The RBI did not tell banks to cut lending rates directly, but this move clearly pushes banks to bring down borrowing costs. This helps long-term loans the most, and housing loans sit right at the top of that list.
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How Loan Rates can Change Soon?
Home loans today link to three main benchmarks. These are base rate, MCLR and the external benchmark lending rate or EBLR. Loans that link to the external benchmark move the fastest because the rate follows the repo rate almost instantly. MCLR loans move slowly because banks change these rates only when their own cost of funds changes.
Sometimes a 25-basis-point repo cut results in only a 10-basis-point cut in MCLR. It depends on the bank’s cost of money and how they decide loan prices in each cycle.
Jeet Mukesh Chandan, who is the Group Managing Director at BizDateUp, spoke about the effect of cheaper credit. He said the rate cut would “boost confidence from homebuyers to institutional investors, driving demand, accelerating transactions, and stabilising valuations across the ecosystem.” His words point to strong activity if banks pass on the benefit soon.
Borrowers need some Patience
Experts think repo-linked loans will see faster relief. But people with MCLR-linked loans may wait longer because banks update these rates only on reset dates. Santosh Agarwal, CEO of Paisabazaar, explained this in very clear terms.
He said the repo cut “would bring more relief to both prospective and existing home loan borrowers,” and he also said transmission will move faster for floating-rate loans that link directly to the repo rate. For MCLR or other internal benchmarks, he said the timing “would depend on the interest reset dates set by their lender.”
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He also explained that when rates fall, borrowers usually get two options. They can reduce their EMI, or they can shorten their loan term while keeping the EMI the same. As banks slowly pass on the benefit, experts expect better credit demand, better liquidity and a stronger lending environment in the coming months.
Current Home Loan Rates Still Show Old Repo Level
Most major banks still offer home loans based on the older repo rate of 5.50%. These rates should fall soon because the RBI has now cut the rate to 5.25%.
- HDFC Bank currently gives home loans between 7.90% and 13.20%.
- ICICI Bank charges between 8.75% and 9.80%.
- Axis Bank offers 8.35% to 9.10% when borrowers have a credit score above 751, and 8.60% to 9.35% for lower scores.
- SBI gives rates between 7.50% and 8.70%, and its EBLR stands at 8.15%.
- Canara Bank gives rates between 7.40% and 10.25%, and its lending benchmark begins at 8.25%.
What can you Expect?
Some banks may act fast and cut their rates soon, while others may take a few weeks. But the direction is very clear. Home loans are likely to become cheaper. This brings good news for people who want to buy a home and also for people already paying a home loan.
