New Delhi: The Reserve Bank of India has cut the repo rate by 25 basis points - from 5.50% to 5.25%. This has raised hopes that home loan interest rates
will fall soon. The RBI did not order banks to cut rates, but the move pushes lenders to lower borrowing costs, especially for long-term loans like housing. Home loans in India are linked to three types of benchmark rates:
- Base Rate
- MCLR (Marginal Cost of Funds-Based Lending Rate)
- External Benchmark Lending Rate (EBLR)
Among these, EBLR-linked loans see the fastest change because they move directly with the repo rate.
MCLR-linked loans usually take time to reflect repo rate cuts.
Also Read: Good News On Home Loans! RBI Cuts Repo Rate by 25 bps — See How Much You Could Save
A 25-basis-point cut in repo rate may translate to only a 10-basis-point cut in MCLR, depending on each bank’s internal cost of funds.
Current Home Loan Rates at Major Banks
Banks are still offering rates based on the old 5.50% repo rate, but this is expected to change soon.
- HDFC Bank: 7.90% – 13.20%
- ICICI Bank: 8.75% – 9.80%
- Axis Bank: 8.35% – 9.10% (credit score above 751), 8.60% – 9.35% (credit score below 751)
- SBI: 7.50% – 8.70% (EBLR: 8.15%)
- Canara Bank: 7.40% – 10.25% (benchmark at 8.25%)
Some banks may cut rates quickly, while others might take a few weeks.
Utkarsh Kawatra, CEO and Co-founder of myHQ by ANAROCK, said the rate cut is likely to support new commercial supply pipelines and improve affordability for companies looking to expand.
“With the latest 25-bps repo rate cut, we anticipate a positive impact across India’s office real estate sector. Reduced borrowing costs support new commercial supply pipelines while improving affordability for occupiers financing expansions or fit-outs,” he said.
He added that the easier cost of capital could push sectors like BFSI, GCCs, startups, and technology firms to accelerate expansion plans in the next 2–3 quarters.
“This reduction in the cost of capital is likely to encourage sectors to accelerate planned expansions—strengthening demand and improving occupancy levels… Bengaluru and Gurgaon, which react fastest to positive signals, may see fresh conversations around seats and upgrades first.”
Lower financing costs also help developers bring new office supply into the market more efficiently.
“Even a modest rate cut can shift sentiment from ‘let’s wait’ to ‘let’s move,’ and we expect this to be reflected in increased leasing activity, especially in flexible offices and co-working spaces,” Kawatra noted.
What This Means for Homebuyers
The trend is clear: home loans are set to become cheaper. This is good news for few homebuyers looking for better affordability and existing borrowers waiting for their rates to fall
With the RBI signalling a softer rate cycle, the housing market may see stronger demand and better affordability in the coming months.
