If you are planning to buy a new house, this could be the perfect time. Several major banks in India have reduced their home loan interest rates, making home loans more affordable for customers.
After the Reserve Bank of India (RBI) reduced the repo rate by 1.25% (125 basis points) in May 2026, banks have started lowering their lending rates.
At present, the repo rate is stable at 5.25%, which has increased competition among banks to offer cheaper home loans.
Big Banks Reduce Loan Interest Rates
Many government banks including Punjab National Bank (PNB), Indian Bank, Bank of India, and Bank of Baroda have announced cuts in their MCLR rates. MCLR is the benchmark rate that directly affects home loan EMIs.
These banks reduced their MCLR by around 5 basis points (bps), giving relief to both existing and new borrowers. This move comes after the RBI had already reduced the repo rate by 100 bps earlier in 2025.
Punjab National Bank Gives Major Relief
Punjab National Bank surprised customers by cutting MCLR rates across all tenors by 5 bps.
The bank reduced its one-year MCLR from 8.95% to 8.90%. At the same time, the three-year MCLR was lowered from 9.25% to 9.21%.
This reduction can help borrowers pay lower EMIs on home loans.
Indian Bank and Bank of India Also Slash Rates
Indian Bank has also reduced its MCLR rates by 5 bps for a limited period. The new rates came into effect from July 3, 2025.
Meanwhile, Bank of India reduced MCLR rates across all loan tenors from July 1, 2025.
The bank’s one-year MCLR, which is important for deciding home loan interest rates, has been reduced from 9.05% to 9%. Its three-year MCLR has also been lowered from 9.20% to 9.15%.
Bank of Baroda Makes Home Loans More Affordable
Bank of Baroda has also announced a major reduction in home loan rates. The bank is now offering home loans at an interest rate of 7.45%.
Along with cheaper loan rates, the bank has also removed the processing fee completely. This decision is expected to attract more home buyers looking for affordable financing options.
With interest rates falling across several banks, this may be a good opportunity for people planning to purchase their dream home.
