In a move that could bring relief to loan borrowers, the Reserve Bank of India (RBI) on Friday reduced the repo rate by 25 basis points from 5.5 per cent to 5.25 per cent. This signals banks to cut their lending rates, particularly on long-term loans like home loans. Since home loan interest rates may be linked to the base rate, MCLR (Marginal Cost of Lending Rate), or EBLR (External Benchmark Lending Rate), the most immediate benefit is likely for those whose loans are tied to the external benchmark, which directly follows changes in the repo rate.
While MCLR-linked loans are also expected to move in line with repo rate changes, the adjustments are not always equal. So, even if the RBI cuts the repo rate by 25 basis points, your loan rate may reduce by only around 10 basis points.
Here’s a quick look at the current variable home loan interest rates offered by major banks, based on the repo-linked lending rates:
Top Private Banks
HDFC Bank:
Currently charges between 7.90 per cent and 13.20 per cent, which includes a markup over the previous repo rate of 5.5 per cent. With the repo cut to 5.25 per cent, the revised rates are expected to fall to around 7.65 per cent–12.95 per cent.
ICICI Bank:
ICICI Bank’s external benchmark lending rate (EBLR) stood at 9.20 per cent when linked to the 5.5 per cent repo rate. With the new repo rate, it is likely to reduce. Home loan interest rates currently range from 8.75 per cent to 9.8 per cent per annum.
Kotak Mahindra Bank:
Home loan rates linked to the 5.5 per cent repo rate range between 7.99 per cent and 12 per cent for salaried borrowers, and 7.99 per cent to 13.30 per cent for self-employed individuals.
Axis Bank:
For borrowers with a CIBIL score of 751 and above, the rate is 8.35 per cent to 9.10 per cent. For scores below 750, the interest rate ranges from 8.60 per cent to 9.35 per cent, based on the old repo rate.
Public Sector Banks
State Bank of India (SBI):
SBI’s EBLR is 8.15 per cent, based on the 5.5 per cent repo rate, and home loan interest currently ranges between 7.5 per cent and 8.7 per cent.
Union Bank of India:
With an EBLR of 8.25 per cent, Union Bank offers home loan interest rates between 7.45 per cent and 10 per cent, depending on the borrower’s credit score.
Canara Bank:
Charges a lending rate of 8.25 per cent, with effective home loan rates ranging from 7.40 per cent to 10.25 per cent.//
