All eyes will be on the Reserve Bank of India (RBI) governor Sanjay Malhotra on April 9 as he announces the first monetary policy for the financial year 2025-26, post the conclusion of the three-day Monetary Policy Committee (MPC) meeting.
Markets and economists expect the MPC to announce a repo rate reduction of at least 25 basis points, which means that home loan interest rates too will ease further. Given that lenders such as Central Bank of India, Union Bank of India, Punjab National Bank and Bank of India, among others, offer interest rates ranging from 8.1 percent to 8.15 percent, a repo cut on April 9 could mean home loan rates dipping below 8 percent per annum.
So far, most public sector lenders have passed on the entire benefit of the 25 bps cut announced in February to existing as well as fresh home loan borrowers. As per BankBazaar data, private sector banks such as HDFC, Axis and ICICI have reduced interest rates by 5-10 bps on fresh home loans between January 2025 and April 4, 2025.
However, HDFC Bank and Axis Bank had confirmed to Moneycontrol earlier that they had transmitted the entire 25-bps benefit to their existing customers. As per RBI rules, banks have to review interest rates at least once every quarter, though the timing of rate transmission could vary as per the loan agreement. New borrowers, too, could see their rates going down in the days to come.
All new retail floating-rate loans sanctioned after October 1, 2019, are linked to an external benchmark, which is repo rate in the case of most banks. The effective interest rate – what is charged to home loan borrowers – is made up of three components: the repo rate, the spread that the bank decides and the credit risk premium, which is determined by the borrower’s credit score.
Also read: MC Poll| RBI likely to cut repo rate by 25 bps in April policy
Here’s a look at the cheapest home loans offered by Indian banks:
Central Bank of India and Union Bank of India
At 8.10 percent, these banks currently offer the lowest interest rates, down from 8.35 percent as on January 31, 2025, as per BankBazaar. On a Rs 50-lakh home loan with a 20-year tenure, the equated monthly installment (EMI) will work out to Rs 42,134.
Bank of India, Indian Overseas Bank and Punjab National Bank
These government-backed lenders charge a slightly higher rate of 8.15 percent; all three have reduced their home loan rates from 8.4 percent in January 2025 to 8.15 percent as on April 4. Here, EMI on a 50-lakh loan with a 20-year tenure works out to be Rs 42,290.
Canara Bank
This state-owned bank’s lowest interest rate on offer is 8.2 percent, down from 8.45 percent in January 2025. In this case, the EMI on a 50-lakh loan with a 20-year tenure is Rs 42,446.
State Bank of India and LIC Housing Finance
The home loan rates at the country’s largest bank – SBI – start at 8.25 percent, after the 25-bps repo rate cut in February. The EMI on a 50-lakh loan with a 20-year tenure will amount to Rs 42,603. Another PSB – Indian Bank – and two leading non-banking financial companies (NBFCs) – LIC Housing Finance and Bajaj Finserv – also offer the same interest rate on their home loans. Do note that, unlike banks, housing finance companies’ interest rates are not linked to the repo rate. However, they tend to move in tandem with their competitor banks’ interest rates.
Bank of Baroda
This leading government-owned bank’s home loan rates start from 8.4 percent. As per BankBazaar’s data, the same rate was on offer even in January 2025. The EMI on a Rs 50-lakh loan with a 20-year tenure works out to be Rs 43,075.
PNB Housing Finance
This HFC currently charges interest starting at 8.5 percent. The EMI on a Rs 50-lakh loan with a 20-year tenure will amount to Rs 43,391.
Aditya Birla Housing Finance
This private HFC’s lowest home loan rate on offer is 8.6 percent. The EMI on a Rs 50-lakh loan with a 20-year tenure will be Rs 43,708.
Kotak Mahindra Bank
This private sector lender’s home loan rates start from 8.65 percent, 10 bps lower than what it offered in January (8.75 percent). The EMI on a Rs 50-lakh loan with a 20-year tenure work out to be Rs 43,867.
HDFC Bank
Private sector banking giant HDFC Bank’s home loan interest rates start at 8.7 percent, 5 bps lower than the interest rate offered in January 2025. The EMI on a Rs 50-lakh loan with a 20-year tenure amounts to Rs 44,026.
Axis Bank and ICICI Bank
Both these banks’ lowest home loan interest on offer is 8.75 percent as on April 4, 2025, as per BankBazaar data. The rates charged to fresh home loans has remained unchanged from January 2025. The EMI on a Rs 50-lakh loan with a 20-year tenure will amount to Rs 44,186.
Note: Data compiled by BankBazaar.com. Rates as advertised on the respective lenders’ websites on January 31, 2025 and April 4, 2025. The rates apply to eligible borrowers only for floating rate loans. These rates are indicative and may vary based on individual factors like credit score, income, and other criteria. Other terms and conditions could apply.
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