8 Banks Offering the Cheapest Repo Rate-Linked Home Loan Interest Rates in April 2025

The Reserve Bank of India (RBI) made a substantial move in the month of April 2025 to stimulate economic growth and make housing more affordable by reducing the repo rate by 25 basis points to 6%. Several of the banks have so far reacted to this decision, switching to more in line with borrowers home loan interest rates.​

Top 8 Banks with the Lowest Repo Rate-Linked Home Loan Interest Rates

On April 9, 2025, the cheapest home loan interest rates are provided by these public sector banks: ​

• Union Bank of India: Starting at 8.10% per annum
• Central Bank of India: Starting at 8.10% per annum​
• Bank of Maharashtra: Starting at 8.10% per annum​
• Canara Bank: Starting at 8.15% per annum​
• Bank of Baroda: Starting at 8.15% per annum​
• Punjab National Bank (PNB): Starting at 8.15% per annum​
• State Bank of India (SBI) : 8.25% per annum onwards.
• Punjab and Sind Bank: Starting at 8.25% per annum​

Given this situation, these rates are even more favorable to borrowers with high credit scores, as the banks usually set the lowest rates for bank customers with the best credit histories.​

Impact of RBI’s Repo Rate Cut

The RBI’s move to reduce the repo rate will help to decrease the corresponding borrowing cost and induce demand in the housing sector. Home loans, being a derivative of repo rate, do lower the rate of interest if repo rate dips. The change benefits both new and existing borrowers, but to what extent existing borrowers will benefit turns on the terms of their loan agreements and frequency of reset of their interest rates.​

For example, PNB reduced the Repo Linked Lending Rate (RLLR) from 9.10% to 8.85% on April 10, 2025 onwards. Also, on April 11, 2025, Indian Bank lowered its rate cut to 8.70 percent from 9.05 percent RLLR. It was also seen that Bank of India adjusted its RLLR from 9.10% to 8.85% from April 9, 2025.​

Future Outlook

If the RBI continues with its accommodative monetary policy stance, then analysts predict the home loan interest rates will be below the 8% mark. Based on projections, RBI may cut rates further, with the possibility of the repo rate being brought down to 5.25 percent and inviting successive reductions of 25 basis points each in future policy meetings.

A drop in the rate of home loan interest rates would in turn lower down household debts and would bring down interest rates on home loans, thus making housing cheaper and boosting the real estate sector.​

Considerations for Borrowers

Lower interest rates are good for borrowers but keep in mind that…

• A high credit score is an asset, as it grants access to interest rates as low as possible.​
• Enjoy Interest Savings over Time: Satisfies one’s penchant for saving interest by getting a smaller loan tenure with the same EMI.​
• Loan Type: Make sure that the link of your loan is repo rate based so you get to avail cuts in the rate.​

For instance, it will cut short the tenure, as well as the total interest outgo, if the loan EMI remains the same after a rate cut. If a borrower has a ₹40 lakh loan to be paid over 20 years at an interest of 8.5%, reducing this to 8% with constant EMI can reduce the loan tenure by almost 20 months and give huge interest saving.​

Further Ahead!

After the recent repo rate cut by RBI, the home loan interest rates of the public sector banks are more competitive. In assessing their financial standing, credit scores and loan terms, borrowers can make the best of the present low-interest-rate environment.