Home buyers have been greatly relieved after the Reserve Bank of India (RBI) cut the repo rate. RBI has already cut the repo rate twice in 2025, reducing it by 50 basis points, bringing down the benchmark repo rate to 6 percent from 6.5 percent earlier.

This rate cut from February 2025 comes after RBI raised the repo rate from May 2022 to February 2023 and kept no change thereafter. This 50 bps cut in the repo rate has brought down home loan interest rates below 8 percent. This news is like a lifesaver for millions of people who are dreaming of buying their own home.

Repo Rate Cut

The repo rate is the rate at which RBI lends money to commercial banks. When this rate is low, it becomes cheaper for banks to borrow, and they can pass on this benefit to customers by reducing interest rates on other loans, including home loans.

This has a direct impact on your monthly installments (EMI), which get reduced, thereby reducing the burden on your pocket. If you have taken a home loan at a floating rate, then you will see its benefits immediately.

Your credit score will determine the interest rate

Banks use credit scores to determine your loan eligibility. Usually, a credit score above 750 is considered good, while a credit score below 750 is considered bad. If your credit score is below average, then banks can charge you a higher interest rate. Therefore, if you want to get a home loan at a low interest rate, then it is very important to keep your credit score better. This is an important measure of your financial health.

Who is giving the cheapest loan

According to the data of BankBazaar, if we talk about the interest rates of government banks, then the lowest interest rate for a home loan in Canara Bank is 7.80 percent. If you take a loan of ₹30 lakh for 20 years at this rate, you will have to pay an EMI of ₹24,720 every month.

Another government bank, Union Bank of India, is offering home loans at a minimum rate of 7.85 percent. If you take a loan of ₹30 lakh for 20 years from this bank, you will have to deposit an EMI of ₹24,810.

Government bank Indian Overseas Bank is offering home loans at a minimum rate of 7.9 percent. If you take a loan of ₹30 lakh for 20 years from this bank, you will have to pay an EMI of ₹24,900 every month. The country’s largest government bank, State Bank of India, is offering loans at a minimum rate of 8 percent. If you take a loan of ₹30 lakh for 20 years from SBI, you will have to pay an EMI of ₹25,080.