Lower EMI for Home Loans: There is a relief news for those taking home loans. Many major banks of the country have reduced the interest rates to be recovered on their home loans. Canara Bank, Punjab National Bank (PNB), Union Bank of India (Union Bank of India), Bank of Baroda, Bank of India (Bank of India) and Indian Overseas Several major banks including the bank (Indian Overseas Bank) are included. That is, now those taking home loans from all these banks will get the benefit of this deduction. Due to this change, the EMI of the home loan can be reduced or the loan can be reduced.
The effect of reducing RBI’s repo rate
In fact, these banks announced to reduce interest rates on home loans after the Reserve Bank of India (RBI )’s decision to cut the repo rate by 25 basis points. On 7 February 2025, the Reserve Bank decided to reduce the repo rate by 25 basis points to 6.25% in the Monetary Policy Committee (MPC) meeting. With this deduction, borrowing for banks became cheaper, which will now get direct benefit to those taking home loans.
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These banks reduce interest rates
After reducing the repo rate of the Reserve Bank, many major banks have reduced the interest rates (RLR) related to their repo rate (RLLR). You can see their details here.
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Canara Bank has reduced its RLR from 9.25% to 9.00%. This new rate is applicable from 12 February 2025.
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The new RLR rate of Bank of Baroda has increased to 8.90%, which has also been implemented from 10 February 2025.
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Bank of India has reduced its interest rate from 9.35% to 9.10%, which is in force from 7 February 2025.
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Union Bank of India (Union Bank of India) has reduced its RLR from 9.25% to 9.00%, which is applicable from 11 February 2025.
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Punjab National Bank (PNB) has also reduced its RLLR from 9.25% to 9.00%, which is applicable from 10 February 2025.
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Indian Overseas Bank has reduced its RLR from 9.35% to 9.10%, which is applicable from 11 February 2025.
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What is the meaning of RLR?
Repo Linked Lending Rate (RLR) is the interest rate on which banks give loans to their customers. This rate is related to the repo rate fixed by the Reserve Bank. In October 2019, RBI issued a circular, asking all banks to link their retail loans to an external benchmark rate. Since then, the repo rate for most banks has become a benchmark. If a customer has taken a RLR based home loan, then its interest rate keeps decreasing or increasing with the change of repo rate. Most home loans are at floating rate, so their loan interest rates are connected to RLR.
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What will be the effect on old and new customers
The impact of RLR cuts will vary on older and new customers. Those who take new home loans will get the benefit of cutting interest rates immediately. But the old customers will get the benefit only when the time to revise their interest rate will come. Generally, banks do this once in three months or 6 months.
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Will it be right to take a home loan now?
If you are planning to take a home loan, this may be a good chance for you. Because after cutting interest rates, you will have to give less EMI for the same loan. Apart from this, banks often offer loan offers to attract new customers and with better conditions.
