Home Loan Interest Rate: After reducing the repo rate of RBI, banks have started reducing home loan interest. Now 6 big banks of the country have reduced the interest on home low. The Reserve Bank of India (RBI) cut the repo rate by 25 basis points i.e. 0.25% on 7 February 2025 in its Monetary Policy Committee (MPC) meeting. This reduced to 6.25%. This rate was stable in the last 2 years. Now it was cut. Since then, most home loan buyers are expecting that banks will reduce home loan rates. After this decision of RBI, 6 banks of the country have reduced interest on home loans. Several banks including Canara Bank, Punjab National Bank (PNB), Union Bank of India and Bank of Baroda have also cut their repo linked lending rate (RLR) by 0.25%.
What is Repo Linked lending Rate (RLR)?
Repo linked lending rate is the rate on which banks give loans to customers. This rate is directly connected to the repo rate of RBI. In October 2019, the RBI issued a circular instructing banks to connect their retail loans with the external benchmark rate (E-BLR). This has made the repo rate the main benchmark for most banks. Customers who choose home loans related to RLLR, their interest rates decrease or increase in RBI’s repo rate. Most customers take floating rate home loans, which are connected to RLLR. Now customers have the option to either reduce their EMI or reduce the loan period.
Banks reduced interest rates on loans
Canra bank
Canara Bank has reduced its RLLR from 9.25% to 9.00%. This new rate will be applicable from 12 February 2025 and will be applicable to the same accounts, which have been opened on or after 12 February 2025. Or have completed 3 years in the RLR system.
Bank of Baroda
Bank of Baroda has revised its Baroda Repo Linked Lending Rate (BRLLR) to 8.90%, which will be applicable from 10 February 2025.
Bank of india
Bank of India has reduced its RLR from 9.35% to 9.10%. This rate has come into force from 7 February 2025.
Union bank of india
Union Bank of India has reduced its RLR from 9.25% to 9.00%. This rate will be applicable from 11 February 2025.
Indian Overseas Bank
The Indian Overseas Bank (IOB) has cut its RLR by 25 basis points, decreasing from 9.35% to 9.10%. This change will be applicable from 11 February 2025.
Punjab National Bank (PNB)
PNB has also reduced its RLLR from 9.25% to 9.00%. This rate will be applicable from 10 February 2025.
What will be the effect on home loan customers?
After the RBI cut in the repo rate, the reduction in the RLLr of the banks will provide relief to the customers taking home loans. This will make new home loans cheap and can reduce the EMI of existing customers. Customers can reduce their EMI if they want or save interest by reducing the period of their loan.
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