RBI Cuts Repo Rate to 6% — Will Your Home Loan Interest Rate Drop Below 8%?

Synopsis: The Reserve Bank of India has reduced the repo rate by 25 basis points to 6% on April 9, 2025, marking its second cut this year. This move could lower home loan interest rates to below 8%, bringing relief to borrowers. However, the benefit depends on how swiftly banks pass on the rate cut. Borrowers are advised to track rate changes and explore refinancing options.

In a move aimed at supporting economic growth amidst global headwinds, the Reserve Bank of India (RBI) on April 9, 2025, reduced the repo rate by 25 basis points, bringing it down to 6%. This marks the second consecutive rate cut this year, with the central bank adopting an accommodative stance to encourage borrowing and investment.

This rate cut could translate to home loan interest rates dipping below 8%, especially for borrowers with good credit scores and those considering loan refinancing. Currently, home loans from many public sector banks start around 8.1%, and this move may help reduce them further.

Adhil Shetty, CEO of Bankbazaar.com, believes this rate cut could benefit borrowers significantly. Those with credit scores above 750 may be able to refinance to rates below 8%. “If you’re paying much higher EMIs, this is a good time to explore refinancing,” he said.

However, the actual reduction in your EMIs will depend on your bank’s response time and policy. Some banks update their rates quickly in response to RBI changes, while others might delay adjustments due to internal factors.

For example, as of April 4, 2025, Bank of India, Indian Overseas Bank, and Punjab National Bank lowered their home loan interest rates to 8.15%, down from 8.4% in January. This brings the EMI for a Rs50 lakh loan over 20 years to approximately Rs42,290.

Similarly, Central Bank of India and Union Bank of India are offering loans starting at 8.10%, compared to 8.35% earlier, resulting in an EMI of about Rs42,134.

Private lenders and NBFCs have also made adjustments. For instance, Kotak Mahindra Bank’s rates begin at 8.65%, and HDFC Bank’s rates start from 8.7%. These variations show how important it is for borrowers to compare rates and choose the best deal.

While the RBI's move is encouraging, borrowers must actively track rate changes and consider refinancing or switching lenders to make the most of lower rates.

Disclaimer: This content is for informational purposes only and does not constitute financial advice. Always consult with your bank or a certified financial advisor before making decisions related to loans or refinancing.