Union Bank Cuts Home Loan Interest Rates

The lender's decision comes weeks after the Reserve Bank of India cut the repo rate by 25 basis points, from 5.50% to 5.25%. The move had raised hopes that home loan interest rates would soften soon. While the RBI did not direct banks to lower rates, the reduction encourages lenders to pass on benefits to borrowers, particularly for long-term loans like housing.

State-owned Union Bank of India on Tuesday, December 23 announced a reduction of 0.30% points in home loan rates and 0.40% points in vehicle loan rates. According to an official statement, the reduction in the final lending rates under the External Benchmark Linked Rate (EBLR) framework has been made possible through a revision of spreads.

Before the Union Bank rate cut, HDFC Bank offered home loans at 7.90%–13.20%, ICICI Bank at 8.75%–9.80%, and Axis Bank at 8.35%–9.10% for borrowers with credit scores above 751 and 8.60%–9.35% for those below 751.

State Bank of India’s rates ranged from 7.50%–8.70% (EBLR: 8.15%), while Canara Bank offered 7.40%–10.25% (benchmark: 8.25%).

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Union Bank reported a 0.4% quarter-on-quarter (QoQ) decline in consolidated revenues for the quarter ended September (Q2 FY 2025–26), and a 1.8% year-on-year (YoY) decline. Expenses for the quarter were down 0.1% QoQ but up 2.9% YoY. Net profit remained flat on a QoQ basis but fell 6.8% YoY. The bank’s earnings per share (EPS) stood at 5.8 for Q2 FY 2025–26.

With the latest cut, Union Bank joins the early movers in passing on the benefit of softer monetary policy, signaling potential reductions in borrowing costs across other lenders in the near term.