The Reserve Bank of India (RBI) is set to announce its first monetary policy for the financial year 2025-26 on April 9, with markets and economists expecting a repo rate reduction of at least 25 basis points. This could lead to a decrease in home loan interest rates, making it an opportune time for those considering a new loan or refinance. Currently, public sector lenders such as Central Bank of India, Union Bank of India, and Punjab National Bank offer interest rates ranging from 8.1% to 8.15% per annum.
Private sector banks like HDFC, Axis, and ICICI Bank have already reduced their interest rates on fresh home loans by 5-10 basis points between January and April. According to RBI rules, banks are required to review interest rates at least once every quarter, and new borrowers may see their rates going down in the coming days.
A 25-basis point repo rate cut could mean home loan interest rates dipping below 8% per annum. For instance, a Rs 50-lakh home loan with a 20-year tenure would attract an EMI of Rs 42,106 with an interest rate of 7.9% per annum, compared to the current EMI of Rs 42,290.
The article provides a breakdown of the cheapest home loans offered by Indian banks, with Central Bank of India and Union Bank of India offering the lowest interest rates at 8.1% per annum. Other public sector banks, such as Bank of India, Indian Overseas Bank, and Punjab National Bank, offer interest rates ranging from 8.15% to 8.25% per annum.
Private sector lenders like HDFC Bank, Axis Bank, and ICICI Bank offer interest rates ranging from 8.25% to 8.75% per annum. Housing finance companies like LIC Housing Finance, Bajaj Finserv, and PNB Housing Finance also offer competitive interest rates, with rates starting at 8.2% to 8.6% per annum.