THESE 5 banks are offering home loan rates as low as 7.35% – Is your EMI still high?

In the first half of 2025, the Reserve Bank of India (RBI) has reduced the repo rate by 100 basis points, ensuring a significant decline in the loan rates in the banking sector. This has brought great relief, especially for home loan borrowers, because this loan is taken for a long period (20 to 30 years), and even a slight change in interest rates has a big impact on EMI.

RBI’s warning: Customers should get the benefit of at least 50 basis points

The RBI has clearly instructed all banks to give the benefit of a cut of at least 50 basis points to their customers. With this step, it is expected that the rest of the banks will also reduce the rates soon and customers will get relief.

Weeks after cutting the repo rate by 50 basis points, the RBI urged banks to quickly lower their lending rates to help speed up the impact of its policy move. In its June bulletin, the central bank said current financial conditions are supportive enough for banks to effectively pass on the benefit of rate cuts. Since the rate reductions in February and April, many banks have already started lowering interest rates for their customers.

PSU banks showed speed, many private banks lagged behind

A 100-basis point cut in the repo rate has led public sector banks to significantly lower their home loan rates, from around 8.40–8.50% to as low as 7.35–7.50%, says Adhil Shetty, Co-founder and CEO, BankBazaar. This full transmission makes borrowing more affordable, especially for buyers in the affordable housing segment, he adds.

“Private sector banks, however, have been slower to respond. While a few have passed on partial cuts of 25–55 basis points, others are yet to move. As banks continue to reprice loans, the broader trend suggests cheaper credit and improved housing affordability in the coming months,” Shetty notes.

Also rate: Cheapest home loans in June: THESE banks charging lowest interest rates after RBI rate cut

Impact on affordable housing

Shetty feels that a 100-basis points reduction in repo makes borrowing more affordable for both buyers and developers. High interest costs have held back buyers, especially in the affordable housing space, he says.

“This series of rate cuts are expected to increase the demand for housing. Lower interest rates mean more homebuyers will be able to afford homes, driving up property sales and increasing liquidity for developers. This, in turn, will encourage developers to launch more affordable housing projects, helping bridge the significant gap between housing demand and supply in this segment,” he hopes.

Home loan interest rates – Top 5 public and private-sector banks

Canara Bank and Union Bank of India have offered the lowest interest rates — starting at just 7.35%. At the same time, SBI, PNB, and Bank of Baroda are also not far behind with starting rates of 7.50%. In contrast, private banks have not been able to pass on the full benefit of this cut to the consumers. HDFC Bank’s rates are 8.45%, ICICI Bank’s rates are 8.50% or more, Axis and IndusInd Bank’s rates remain up to 8.75%.

Also read: RBI policy: You will now save Rs 3,000 per month on your 50 lakh home loan EMIs – Here’s how

‘Most buyer-friendly times’ to buy a home

County Group director Amit Modi called it the ‘best time for buyers’. “This year is perhaps one of the most buyer-friendly times we’ve seen so far, especially for those exploring affordable housing options. With the RBI’s recent rate cuts and banks passing on the benefit, EMIs have become a lot lighter, lowering the entry barrier for many first-time buyers,” he comments.

He, however, adds that “while there may still be room for a 25–50 bps cut — given that the repo rate touched 5% back in 2010 — we’re likely approaching the lower end of the cycle.” This anticipated rate cut will strengthen the buyers’ sentiments in the affordable housing segment, where even a slight change in EMI outgo creates a significant difference, Modi stresses.

More rate cuts, he believes, will further steer the sector’s growth momentum, encouraging developers to escalate inventory. “For end-users, this means more choices and better deals, while for the sector, it could translate into improved sales velocity and healthier cash flows across the board. Hence, this is a smart window to make a move, both from a financial and long-term value standpoint.”

Is buying a house now a profitable deal?

If you are thinking of buying a house for the first time, then the time is probably the best. Interest rates are at the lowest level in many years. The trend towards affordable housing is also increasing in the real estate market.

A report by Knight Frank showed that on an average, a household in Mumbai now spends 48% of its income on monthly home loan payments. That’s a slight improvement from 50% last year, but still much higher than in other major Indian cities.

In comparison, people in the National Capital Region (NCR, which includes Delhi and its suburbs) and Bengaluru spend less than 30% of their income on EMIs, while in Ahmedabad, it’s only 18%.

Also read: Home loan rejected by banks? 5 steps you can take to improve your chances

What things to keep in mind?

If you are taking a loan from a private bank, then double-check the rate. If you have taken a loan at the old rate, ask the bank for a rate reset or consider a balance transfer. Even though the EMI is low, keep an eye on the loan tenure and total interest cost.

Summing up…

A 100 basis point cut in the repo rate and the possibility of a further 25–50 bips is making this year a golden window for home loan borrowers. The fall in interest rates has brought down EMIs to the lowest in years, and many PSU banks have also started offering the cheapest loans. If you have been putting off the decision to buy a house till now, now is probably the right time — because interest rates are low and options are more.