Home Loan EMI Reduced: There is a relief news for home loan borrowers. Many major banks of the country have reduced the interest rates charged on their home loans.

Lower EMI for Home Loans: Those who have reduced the interest rate include many major banks including Canara Bank, Punjab National Bank (PNB), Union Bank of India, Bank of Baroda, Bank of India and Indian Overseas Bank. That is, now those who take home loans from all these banks will get the benefit of this reduction. Due to this change, the EMI of the home loan can be reduced or the tenure of the loan can be reduced.

Effect of RBI reducing repo rate

The effect is that these banks have announced reduction in interest rates on home loans after the Reserve Bank of India's (RBI) decision to cut the repo rate by 25 basis points. The Reserve Bank, in the Monetary Policy Committee (MPC) meeting on 7 February 2025, decided to cut the repo rate by 25 basis points, making it 6.25%. This reduction made borrowing cheaper for banks, the direct benefit of which will now be available to home loan borrowers.

These banks reduced interest rates

After the Reserve Bank reduced the repo rate, many major banks have reduced their repo rate linked interest rates (RLLR). You can see their details here.

Canara Bank has reduced its RLLR from 9.25% to 9.00%. This new rate is applicable from 12 February 2025.

The new RLLR rate of Bank of Baroda has become 8.90%, which has also come into effect from 10 February 2025.

Bank of India has reduced its interest rate from 9.35% to 9.10%, which is effective from 7 February 2025.

Union Bank of India has reduced its RLLR from 9.25% to 9.00%, which is effective from 11 February 2025.

Punjab National Bank (PNB) has also reduced its RLLR from 9.25% to 9.00%, which is effective from 10 February 2025.

Indian Overseas Bank has reduced its RLLR from 9.35% to 9.10%, which is effective from 11 February 2025.

What is the meaning of RLLR?

Repo Linked Lending Rate (RLLR) is the interest rate at which banks lend to their customers. This rate is linked to the repo rate fixed by the Reserve Bank. In October 2019, RBI issued a circular, in which all banks were asked to link their retail loans to an external benchmark rate. Since then, the repo rate has become the benchmark for most banks. If a customer has taken an RLLR based home loan, then his interest rate keeps increasing or decreasing with the change in the repo rate. Most home loans are on floating rates, so their loan interest rates are linked to RLLR.

What will be the effect on old and new customers

The effect of reduction in RLLR will be different on old and new customers. Those taking new home loans will get the benefit of reduction in interest rates immediately. But old customers will get the benefit of this only when the time comes to revise their interest rate. Usually banks do this once in three months or six months.

Will it be right to take a home loan now?

If you are planning to take a home loan, then this can be a good opportunity for you. Because after the reduction in interest rates, you will have to pay less EMI for the same loan. Apart from this, banks often offer loans with better terms to attract new customers.