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Economic Times
10 hours ago
- Business
- Economic Times
Home loan EMIs continue to fall: 7 banks cut home loan interest rates after RBI repo rate cut in June
Synopsis Following the Reserve Bank of India's repo rate cut in June 2025, several major banks, including SBI, Union Bank, and Bank of Baroda, have reduced their lending rates. This move lowers home loan interest rates for borrowers with floating rate loans linked to the repo rate. Several major banks have reduced their External Benchmark Lending Rates (EBLR) or Repo Linked Lending Rates (RLLR) following the Reserve Bank of India's 50 basis point (0.50%) repo rate cut in June 2025. This translates into lower home loan interest rates for borrowers who have taken or are planning to take floating rate loans which are linked to repo rate. ADVERTISEMENT RBI's repo rate actions have a direct impact on home loan interest rates that follow Repo Linked Lending Rates (RLL The RBI has cut the repo rate by 50 basis points, totalling a 100-basis-point drop in 2025. What does this mean for home loan borrowers? Should you reduce your EMI or your tenure? This video breaks down both choices with real numbers, revealing how you could save up to ₹35 lakh. It's a must-watch before you make a decision. R), an external benchmark linked rate which is linked to repo rate. A lower repo rate translates into a lower RLLR, which means that consumers will pay less in interest over the course of the loan term and have fewer EMIs (equivalent monthly installments) if they continue to pay existing EMIs despite a rate cut. If borrowers want to go lower EMIs then they can keep the tenure same and pay a lower EMI. However, borrowers should note that lower EMI will be applicable only on the reset date of the loan tenure which is usually once in three months. Also read: Public vs private banks: Which of these offers the cheapest home loans now after RBI's 50 bps repo rate cut? Here are banks that have cut their Repo-linked lending rate after the RBI rate cut in June. 1. Indian Overseas Bank Indian Overseas Bank has announced the reduction of Repo Linked Lending Rate (RLLR) by 50 basis points from 8.85% to 8.35%, effective from June 12, 2025. ADVERTISEMENT The State Bank of India (SBI) has revised its Repo Linked Lending Rate (RLLR) with effect from June 15, 2025, in response to the RBI's recent 50 basis point (0.50%) cut in the repo rate. The latest RLLR: 7.75% + Credit Risk Premium (CRP), according to the SBI website. Earlier RLLR: 8.25% + Credit Risk Premium (CRP). ADVERTISEMENT The Union Bank of India has reduced both the External Benchmark Lending Rate (EBLR) and the Repo Linked Lending Rate (RLLR) by 50 basis points, bringing its EBLR down to 8.25% (comprising the new repo rate of 5.50% plus a spread of 2.75%).According to a press release from the bank, 'Following the Reserve Bank of India's reduction in the policy repo rate by 50 basis points, Union Bank of India has revised its key lending rates w.e.f. 11.06.2025. These changes include downward revision of External Benchmark Lending Rate (EBLR) and Repo Linked Lending Rate (RLLR) by 50 basis points. With this move, Union Bank of India has completely aligned its EBLR and RLLR with the recent RBI rate cut which will be beneficial to new and existing Retail (Home, Vehicle, Personal, etc.) and MSME borrowers.' Canara Bank has reduced its Repo Linked Lending Rate (RLLR) from 8.75% to 8.25% for loans tied to the External Benchmark rate. This decision follows the Reserve Bank of India's recent 50 basis point cut in the repo rate from 6.00% to 5.50%, announced during the latest Monetary Policy Committee (MPC) meeting. The revised lending rate will come into effect from June 12, 2025. This move will lower borrowing costs for customers with loans linked to RLLR. ADVERTISEMENT In a regulatory filing, PNB announced that it has revised its Repo Linked Lending Rate (RLLR) from 8.85% to 8.35%, effective June 9, 2025. The new rate reflects the 50 basis point cut in the repo rate and includes a Bank Spread of 20 basis points.'The Exchange is hereby informed that consequent upon the decrease in Repo rate by RBI on 06.06.2025, the Bank has revised RLLR from 8.85% (including BSP of 20bps) to 8.35% (including BSP of 20bps) with effect from 09.06.2025,' PNB stated in its filing. ADVERTISEMENT 6. Bank of Baroda (BoB) home loan ratesBank of Baroda, in compliance with SEBI's disclosure norms, informed the exchanges that it has reduced its Baroda Repo Based Lending Rate (BRLLR) from 8.65% to 8.15%, effective June 7, 2025. This is also a 50 basis point reduction, in line with the RBI's move. 'Pursuant to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, this is to inform that BRLLR has been revised from 8.65% to 8.15% with effect from 07.06.2025,' the bank said. 7. Bank of India home loan rates Bank of India has also joined the rate-cut bandwagon, reducing its Repo Based Lending Rate (RBLR) from 8.85% to 8.35%, effective June 6, 2025. The bank in a BSE announcement stated, 'Pursuant to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, this is to inform that Repo Based Lending Rate (RBLR) has been changed w.e.f. 06.06.2025. 2. Today, RBI has revised the Repo Rate from 6.00% to 5.50% (decrease of 50 bps).The change in RBLR is as under. The effective RBLR is revised from 8.85% to 8.35%, down by 50 bps.' Bank Old Rate New Rate Effective Date Indian Overseas Bank 8.85% 8.35% 12-Jun-25 State Bank of India 8.25% + CRP 7.75% + CRP 15-Jun-25 Union Bank of India 8.75% (approx.) 8.25% (approx.) Jun-25 Canara Bank 8.75% 8.25% 12-Jun-25 Punjab National Bank 8.85% 8.35% 9-Jun-25 Bank of Baroda 8.65% 8.15% 7-Jun-25 Bank of India 8.85% 8.35% 6-Jun-25 ( Originally published on Jun 19, 2025 ) (Catch all the Personal Finance News, Breaking News, Budget 2025 Events and Latest News Updates on The Economic Times.) Subscribe to ET Prime and read the ET ePaper online. NEXT STORY
Hans India
07-06-2025
- Business
- Hans India
RBI Goes For Steepest Interest Rate Cut In 5 Yrs: Home, auto loans get cheaper
New Delhi: Home, auto and other loans are likely to cost less as the Reserve Bank of India (RBI) cut interest rates by a larger-than-expected 50 basis points on Friday and unexpectedly reduced the cash reserve ratio for banks to make available more money to lend in a bid to boost the economy. The RBI's six-member monetary policy committee, headed by Governor Sanjay Malhotra and consisting of three external members, voted five to one to lower the benchmark repurchase or repo rate by 50 basis points to 5.5 per cent. It also cut the cash reserve ratio by 100 basis points to 3 per cent, adding Rs 2.5 lakh crore to already surplus liquidity in the banking system. With the latest reduction, the RBI has now cut interest rates by a total of 100 basis points in 2025, starting with a quarter-point reduction in February - the first cut since May 2020 - and another similar-sized cut in April. The central bank, at the same time, changed its monetary policy stance from 'accommodative' to 'neutral' which means rates could increase or decrease in future depending on incoming data, with Malhotra stating that it may have limited space for further easing. The repo rate is the rate at which the RBI lends money to banks to meet their short-term funding needs. With the latest cut in the repo rate, all External Benchmark Lending Rates (EBLR) linked to it will come down. And if the banks fully pass on this to the borrowers, equated monthly instalments (EMIs) on home, auto and personal loans will decline by 50 bps. RBI, Malhotra said, expects lenders to pass on lower borrowing costs to consumers and boost credit growth with the additional cash they would have following the cut in cash reserve ratio by 100 basis points to 3 per cent. The cut in CRR will take effect in four stages between September and December. "Today's monetary policy actions should be seen as a step towards propelling growth to a higher aspirational trajectory," he said, adding the aspiration is for growth of between 7 per cent and 8 per cent. Giving rationale for the decision, the RBI Governor said inflation or price rise has softened significantly over the last six months from above the tolerance band in October 2024 to well below the target, with signs of a broad-based moderation.
The Print
06-06-2025
- Business
- The Print
Home, auto loans to get cheaper as RBI goes for steepest interest rate cut in 5 years
With the latest reduction, the RBI has now cut interest rates by a total of 100 basis points in 2025, starting with a quarter-point reduction in February – the first cut since May 2020 – and another similar-sized cut in April. The RBI's six-member monetary policy committee, headed by Governor Sanjay Malhotra and consisting of three external members, voted five to one to lower the benchmark repurchase or repo rate by 50 basis points to 5.5 per cent. It also cut the cash reserve ratio by 100 basis points to 3 per cent, adding Rs 2.5 lakh crore to already surplus liquidity in the banking system. Mumbai, Jun 6 (PTI) Home, auto and other loans are likely to cost less as the Reserve Bank of India (RBI) cut interest rates by a larger-than-expected 50 basis points on Friday, and unexpectedly reduced the cash reserve ratio for banks to make available more money to lend in a bid to boost the economy. The central bank, at the same time, changed its monetary policy stance from 'accommodative' to 'neutral' which means rates could increase or decrease in future depending on incoming data, with Malhotra stating that it may have limited space for further easing. The repo rate is the rate at which the RBI lends money to banks to meet their short-term funding needs. With the latest cut in the repo rate, all External Benchmark Lending Rates (EBLR) linked to it will come down. And if the banks fully pass on this to the borrowers, equated monthly instalments (EMIs) on home, auto and personal loans will decline by 50 bps. RBI, Malhotra said, expects lenders to pass on lower borrowing costs to consumers and boost credit growth with the additional cash they would have following the cut in cash reserve ratio by 100 basis points to 3 per cent. The cut in CRR will take effect in four stages between September and December. 'Today's monetary policy actions should be seen as a step towards propelling growth to a higher aspirational trajectory,' he said, adding the aspiration is for growth of between 7 per cent and 8 per cent. Giving rationale for the decision, the RBI Governor said inflation or price rise has softened significantly over the last six months from above the tolerance band in October 2024 to well below the target, with signs of a broad-based moderation. Growth, on the other hand, remains lower than aspiration amid a challenging global environment and heightened uncertainty. 'Thus, it is imperative to continue to stimulate domestic private consumption and investment through policy levers to step up the growth momentum,' he said. 'This changed growth-inflation dynamics calls for not only continuing with the policy easing but also frontloading the rate cuts to support growth.' The rate cut comes as the Indian economy slowed to a four-year low of 6.5 per cent in the fiscal year that ended March. RBI projected the economy to grow by the same measure in the current financial year that started on April 1 as rising trade tensions following US President Donald Trump's tariff policies provide headwinds. The central bank lowered its inflation projection to 3.7 per cent for 2025-26 (FY26) from 4 per cent earlier. 'While price stability is a necessary condition, it is of course not sufficient to ensure growth,' he said. With consumer price inflation at 3.16 per cent in April – the lowest since July 2019 – and further expected to stay below the RBI's 4 per cent target (FY26 inflation now projected at 3.7 per cent), the RBI seems to have seized the opportunity to decisively pivot toward growth. The shift comes amid global trade uncertainties and subdued private capex. Unlike previous disinflation episodes primarily driven by volatile food prices, the current moderation (inflation has remained below 4 per cent for three straight months) is broad-based across multiple segments of the consumer basket and may be an indication of a sustained structural easing in price pressures rather than a fleeting dip. CRR cut will lead to an immediate injection of liquidity and reduce funding costs. Lower home loan and construction finance rates will boost housing and infra momentum. Also, enhanced affordability is expected to revive mid and premium housing segments. With funding costs dropping, the monetary easing is also being seen as a strong signal for industry to kickstart capex. Bank loan growth dipped to 9.8 per cent in May 2025, reflecting a broad-based decline in lending in the economy, according to a report from the economic research division of the State Bank of India. 'Monetary policy is not a sufficient condition, but it is a necessary condition,' Malhotra said, adding the central bank was confident its announcements would help boost lending. The RBI, he said, remains committed to provide sufficient liquidity to the banking system. 'The cut in CRR would release primary liquidity of about Rs 2.5 lakh crore to the banking system by December 2025. Besides providing durable liquidity, it will reduce the cost of funding of the banks, thereby helping in monetary policy transmission to the credit market,' he said. Strong macroeconomic fundamentals and a benign inflation outlook provide space for monetary policy to support growth, while remaining consistent with the goal of price stability, he said. 'As the global environment remains uncertain, it has become even more important to focus on domestic growth amidst sustained price stability. Accordingly, today's monetary policy actions should be seen as a step towards propelling growth to a higher aspirational trajectory,' he added. He hastened to add that there was 'no tussle' between price stability and growth in the medium and long term. 'Price stability preserves purchasing power, imparts certainty to households and businesses in their savings and investment decisions and ensures congenial interest rates and financial conditions, all of which foster consumption, investment and overall activity. Moreover, it is crucial for equitable growth and shared prosperity because its absence is disproportionately burdensome on the poor.' While price stability is a necessary condition, it is not sufficient to ensure growth, he said, 'A supportive policy environment is vital. This is even more important during periods of high uncertainties such as the current times.' At the RBI, while price stability remains the focus of monetary policy, it is not oblivious to putting in place complementary monetary and credit policies and regulations that support growth and prosperity, he added. While Radhika Rao, Senior Economist at DBS Bank, said further rate reductions are likely if the growth momentum weakens anew, Crisil said it expects one more rate cut this fiscal, and a hold thereafter. Ranen Banerjee, Partner and Leader, Economic Advisory, PwC India, said the policy rate easing, combined with the liquidity increase for banks when system liquidity is already comfortable, is likely to add a second engine to the consumption growth flight that is anticipated to be already in flight from the income tax cuts taking effect in FY26. 'This is significantly positive for urban consumption, which printed weak in past quarters, and will also likely add a fillip to real estate, discretionary purchases, and private capex.' A healthy monsoon, coupled with low crude prices, is likely to keep inflation aligned to the RBI's 4 per cent target this fiscal, Crisil said, adding the rate cuts will be pivotal in supporting domestic growth this fiscal against external headwinds. PTI JD DP NKD CS ANZ DR TRB This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
