Home Loan EMIs Drop as Banks Slash Rates

 

Driven by the Reserve Bank of India's (RBI) significant 50 basis point (0.50%) repo rate cut in June 2025, major Indian banks have swiftly reduced their lending rates, promising substantial relief for home loan borrowers. This move translates directly into lower home loan EMIs for millions of customers holding floating rate home loans linked to benchmarks like the External Benchmark Lending Rate (EBLR) or Repo Linked Lending Rate (RLLR).

Leading the charge, several public sector banks implemented the full 50 bps reduction:

Indian Overseas Bank (IOB) cut its RLLR from 8.85% to 8.35%, effective June 12, 2025.

Punjab National Bank (PNB) reduced its RLLR from 8.85% to 8.35% (including a 20 bps spread), effective June 9, 2025.

Bank of Baroda (BoB) slashed its Baroda Repo Based Lending Rate (BRLLR) from 8.65% to 8.15%, effective June 7, 2025.

Canara Bank lowered its RLLR from 8.75% to 8.25% for EBLR-linked loans, effective June 12, 2025.

Union Bank of India cut both its EBLR and RLLR by 50 bps, bringing its EBLR down to 8.25% (Repo 5.50% + Spread 2.75%).

The country's largest lender, State Bank of India (SBI), revised its RLLR effective June 15, 2025. SBI's RLLR is now quoted as 7.75% + Credit Risk Premium (CRP), reflecting the reduced repo rate base.

This synchronized reduction across major lenders means borrowers with repo-linked floating rate loans will see their interest costs decrease. The extent of EMI reduction or potential loan tenor shortening depends on the individual loan amount and, crucially, the loan's interest reset date. Borrowers should contact their bank or check their loan statements to understand exactly when their revised, lower EMI will take effect. This wave of RBI rate cut transmission offers significant financial relief and enhanced affordability for homebuyers and existing homeowners alike in the current market.