The dream of owning a home is about to get easier and more affordable.
Home loan interest rates may soon drop to a historic low of 7.1%, following the Reserve Bank of India’s (RBI) recent repo rate cut.
This reduction will directly lower EMIs, helping borrowers save lakhs over time.
For many, this is a golden opportunity to invest in property and finally build their dream home.
How the RBI Cut Impacts Borrowers
The RBI has reduced the repo rate by 125 basis points this year. After the cuts in February and June, the rate fell from 6.5% to 5.5%.
A lower repo rate allows banks to borrow money more cheaply.
Banks pass on this benefit to customers by reducing interest rates on loans linked to MCLR, RLLR, RBLR, and other benchmarks.
This reduction affects home, auto, and personal loans, making EMIs more affordable.
Here’s how some banks have revised their rates:
| Bank | Earlier Rate | New Rate |
|---|---|---|
| Bank of Baroda | 8.15% | 7.9% |
| Indian Bank | 8.35% | 8.1% |
| PNB | 8.35% | 8.1% |
| Karur Vysya Bank | 8.8% | 8.5% |
| Bank of India | 8.35% | 8.1% |
These new rates suggest that home loans could fall below 7.35% and may reach 7.1% in the coming months.
Who Benefits from Lower Interest Rates?
The repo rate cut doesn’t just help homebuyers. Several sectors are likely to see a positive impact:
Auto Loans: Car and two-wheeler loans will become cheaper, boosting sales.
Real Estate: Lower EMIs encourage more people to buy homes, increasing demand.
NBFCs: Reduced borrowing costs strengthen the financial position of non-banking financial companies.
If inflation stays under control, the RBI may cut rates further.
This could make the loan market more competitive and push interest rates even lower
Many banks may also launch attractive offers for new borrowers.
