Public Sector Banks Take the Lead
Homebuyers rejoice. Interest rates on new home loans have now dropped below 7.5%, thanks to the Reserve Bank of India’s recent 50-bps repo rate cut on June 6, 2025.
Public sector banks (PSBs) acted quickly. They passed on the full benefit of the cumulative 100-bps cut since February, making home loans more affordable for lakhs of Indians.
According to BankBazaar.com CEO Adhil Shetty, some PSBs reduced rates by up to 1.1%. While private banks remain slow, PSBs are clearly leading the race in offering cheaper home loans.
Borrowers with floating rate loans sanctioned after October 2019 automatically benefit, as their loans are linked to the repo rate.
Top Banks and Their New Rates
- Canara Bank: Lowest at 7.3%, EMI on ₹1 crore loan = ₹79,341
- Bank of India & Indian Overseas Bank: 7.35%, EMI = ₹79,645
- Union Bank, BoM, CBI: 7.35%, EMI = ₹79,645
- UCO Bank: 7.35%, EMI = ₹79,645
- Indian Bank: 7.4%, EMI = ₹79,949
- BoB: 7.45%, EMI = ₹80,254
- SBI & PNB: 7.5%, EMI = ₹80,559
Private Banks Lag Behind
While PSBs moved swiftly, private lenders like Yes Bank and RBL have yet to revise rates. ICICI, Axis, and HDFC have offered only partial relief—cutting rates by 25 to 60 bps so far.
Refinancing Can Save Lakhs
If your current home loan is at a higher rate, it may be time to refinance. Even a 50-bps drop in interest can save you ₹5–6 lakh over 20 years on a ₹1 crore loan.
Check if your bank has applied the repo cut. If not, consider switching, especially if half your tenure and balance remain.
Waived Fees Sweeten the Deal
To attract borrowers, banks like BoB and PNB are also waiving processing fees throughout July. This makes refinancing or new borrowing even more appealing.
What Should Borrowers Do?
- Verify the revised rate on your existing home loan.
- Contact your bank if the rate hasn’t been reset.
- Consider refinancing if the gap is 50 bps or more.
- Factor in the cost of switching before taking the plunge.
Conclusion: It’s a Borrower’s Market
The RBI’s rate cuts are finally reaching consumers. PSBs have taken the lead, and private banks will likely follow soon. If you’re planning to buy a home or refinance an old loan, now’s the time to act.