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Home loan EMIs just got lighter! Following the Reserve Bank of India’s (RBI) recent decision to cut the repo rate by 50 basis points, several leading Indian banks have reduced their home loan interest rates, offering major relief to both new and existing borrowers. This move could make it the ideal time to consider purchasing your dream home.

On June 6, 2025, the RBI announced a 0.50% reduction in the repo rate, bringing it down to 5.5%. This marks a total cut of 1% since February 2025. The repo rate is the rate at which the RBI lends money to commercial banks, and any change in this rate significantly influences loan and deposit interest rates across the banking sector.

Thanks to this latest reduction, banks have begun passing on the benefits to customers by lowering their Retail Loan Linked Rates (RLLR) and Marginal Cost of Funds-based Lending Rates (MCLR), directly affecting home loan EMIs.

Let’s take a closer look at how various banks are responding to the RBI’s move:

Bank of Baroda was among the first to act swiftly, slashing its Baroda Repo Linked Lending Rate (BRLLR) by the full 0.50%. The BRLLR now stands at 8.15%, down from 8.65%, effective June 7, 2025. This means lower EMIs for both new and existing borrowers linked to BRLLR.

Punjab National Bank has reduced its RLLR from 8.85% to 8.35%, effective June 9. The bank has also announced that its home loan rates now start at just 7.45%. Additionally, PNB’s vehicle loan rates have been set at 7.80% per annum, offering attractive terms for automotive financing as well.

Following the trend, Bank of India also implemented a 0.50% cut in its RLLR, bringing it down to 8.35%. The bank disclosed this adjustment via an official exchange filing, confirming its commitment to making housing finance more affordable.

UCO Bank made a more nuanced adjustment by reducing its MCLR across various tenures by 10 basis points, effective June 10, 2025. Here are the new MCLR rates:

• Overnight: 8.25% → 8.15%

• 1 Month: 8.45% → 8.35%

• 3 Months: 8.60% → 8.50%

• 6 Months: 8.90% → 8.80%

• 1 Year: 9.10% → 9.00%

If your existing home loan is linked to the repo rate (such as RLLR or BRLLR), your monthly EMI will now be lower, providing immediate relief. Even new borrowers stand to gain, as banks compete to offer more attractive loan packages in a cooling interest rate environment.

In short, your dream of owning a home just became more affordable. With EMIs decreasing and banks offering lower interest rates, it’s a buyer’s market for prospective homeowners. Analysts also suggest that more banks may follow suit in the coming weeks, further improving home loan affordability.

For anyone considering a home loan in 2025, the current market dynamics present a golden opportunity. With the RBI adopting a more accommodative stance and banks passing on the benefits, this could be one of the best times in recent years to lock in a low-interest home loan.

Stay tuned for more updates as other financial institutions may soon revise their rates in response to the RBI’s continued push to stimulate housing demand and economic growth.