Homebuyers alert: RBI's next rate cut could bring EMIs under 7.75% — should you refinance your home loan?
All eyes are on the Reserve Bank of India (RBI) as it prepares to announce its monetary policy decision on June 6, 2025. With retail inflation staying below the central bank’s 4% target for the third consecutive month, economists are optimistic about a 25-basis point rate cut to further support growth.
- Jun 5, 2025,
- Updated Jun 6, 2025 4:29 PM IST
The Reserve Bank of India (RBI) is set to announce its monetary policy on June 6, 2025, following a three-day Monetary Policy Committee (MPC) meeting led by Governor Sanjay Malhotra. This announcement is widely anticipated as it could lead to further reductions in home loan EMIs.
The central bank has already reduced the repo rate twice this year, each by 25 basis points, bringing it to 6 percent to stimulate economic growth. This strategic focus on rate reduction underlines the RBI's commitment to fostering a growth-friendly economic environment.
The State Bank of India's Economic Research Department has predicted a possible 'jumbo rate cut' of 50 basis points, reflecting diverse views among financial experts regarding the extent of monetary easing needed. A substantial cut like this could further drive down borrowing costs, possibly lowering interest rates on home loans below 7.75 percent for some lenders. These differing expectations highlight the complexity of monetary policy forecasting, with various institutions interpreting economic indicators in unique ways.
The repo rate indirectly influences home loan interest rates. Adjustments to the repo rate affect banks' borrowing costs, which are then passed on to consumers through interest rates. While this impact is not immediate, it gradually affects loans, particularly those with floating rates. Borrowers are advised to remain informed about potential changes in their EMIs due to these ongoing adjustments.
Amit Modi, Director of County Group, underscores the impact of even minor interest rate cuts on EMIs, stating, “Home loan EMIs today comprise a significant portion of the monthly income for an average urban household. In such a scenario, even a marginal cut in interest rates has a noticeable impact on buyers.” He notes the potential for increased property purchases if interest rates continue to decrease, particularly in burgeoning areas like Noida and Greater Noida. Such potential reductions in EMIs could invigorate market activity, prompting more buyers to invest.
Private sector banks like Axis Bank and ICICI Bank have maintained home loan interest rates at 8.75 percent, despite these repo rate cuts. In contrast, Kotak Mahindra Bank and HDFC Bank have reduced their rates by 10-30 basis points. Economists remain hopeful for another 25-basis point cut in June due to consistent retail inflation levels below the RBI's target of 4 percent, a third consecutive month of such figures.
| SBI Home Loan | 8.00% – 11.05% p.a. | 0.35% of the loan amount (₹2,000–₹10,000 + GST) | At bank's discretion / 1–30 Years |
| HDFC Home Loan | 8.50% – 9.55% p.a. | Up to 0.50% or ₹3,300 + GST (whichever is higher) | 1–30 Years |
| Union Bank Home Loan | 7.85% – 10.25% p.a. | 0.50% up to ₹15,000 + GST | Contact bank / 1–30 Years |
| PNB Housing Loan | 8.00% – 11.20% p.a. | 0.35% or ₹2,500 (min), max ₹15,000 + GST | Up to 90% of property / 1–30 Years |
| LIC HFL Home Loan | 8.00% p.a. onwards | ₹15,000–₹50,000 based on loan size + GST | ₹10L–₹3Cr / 5–30 Years |
| Axis Bank Home Loan | 8.75% – 9.65% p.a. | Up to 1% or ₹10,000 + GST | ₹3L–₹10Cr / 1–30 Years |
| Karnataka Bank Home Loan | 8.60% – 10.62% p.a. | Bank to inform | Up to ₹5Cr / 1–30 Years |
| IDFC Home Loan | 8.85% p.a. onwards | Up to 3% of loan amount | ₹1L–₹5Cr / Up to 30 Years |
| Bank of Baroda | 8.00% – 9.60% p.a. | Bank to inform | ₹1L–₹10Cr / Up to 30 Years |
| Canara Bank Home Loan | 7.90% – 10.75% p.a. | 0.50% (₹1,500–₹10,000) + GST | No limit / Up to 30 Years |
| Kotak Mahindra Bank | 8.65% p.a. onwards | Up to 2% + GST | Up to ₹40Cr / Up to 25 Years |
| DBS Home Loan | Bank to inform | Up to ₹10,000 | Up to ₹5Cr / 1–25 Years |
| Sundaram Home Finance | Bank to inform | Bank to inform | Contact bank |
| Bank of Maharashtra | 7.85% – 10.40% p.a. | Contact bank | Contact bank / 1–30 Years |
Source: Bankbazaar.com
The Reserve Bank of India (RBI) is set to announce its monetary policy on June 6, 2025, following a three-day Monetary Policy Committee (MPC) meeting led by Governor Sanjay Malhotra. This announcement is widely anticipated as it could lead to further reductions in home loan EMIs.
The central bank has already reduced the repo rate twice this year, each by 25 basis points, bringing it to 6 percent to stimulate economic growth. This strategic focus on rate reduction underlines the RBI's commitment to fostering a growth-friendly economic environment.
The State Bank of India's Economic Research Department has predicted a possible 'jumbo rate cut' of 50 basis points, reflecting diverse views among financial experts regarding the extent of monetary easing needed. A substantial cut like this could further drive down borrowing costs, possibly lowering interest rates on home loans below 7.75 percent for some lenders. These differing expectations highlight the complexity of monetary policy forecasting, with various institutions interpreting economic indicators in unique ways.
The repo rate indirectly influences home loan interest rates. Adjustments to the repo rate affect banks' borrowing costs, which are then passed on to consumers through interest rates. While this impact is not immediate, it gradually affects loans, particularly those with floating rates. Borrowers are advised to remain informed about potential changes in their EMIs due to these ongoing adjustments.
Amit Modi, Director of County Group, underscores the impact of even minor interest rate cuts on EMIs, stating, “Home loan EMIs today comprise a significant portion of the monthly income for an average urban household. In such a scenario, even a marginal cut in interest rates has a noticeable impact on buyers.” He notes the potential for increased property purchases if interest rates continue to decrease, particularly in burgeoning areas like Noida and Greater Noida. Such potential reductions in EMIs could invigorate market activity, prompting more buyers to invest.
Private sector banks like Axis Bank and ICICI Bank have maintained home loan interest rates at 8.75 percent, despite these repo rate cuts. In contrast, Kotak Mahindra Bank and HDFC Bank have reduced their rates by 10-30 basis points. Economists remain hopeful for another 25-basis point cut in June due to consistent retail inflation levels below the RBI's target of 4 percent, a third consecutive month of such figures.
| SBI Home Loan | 8.00% – 11.05% p.a. | 0.35% of the loan amount (₹2,000–₹10,000 + GST) | At bank's discretion / 1–30 Years |
| HDFC Home Loan | 8.50% – 9.55% p.a. | Up to 0.50% or ₹3,300 + GST (whichever is higher) | 1–30 Years |
| Union Bank Home Loan | 7.85% – 10.25% p.a. | 0.50% up to ₹15,000 + GST | Contact bank / 1–30 Years |
| PNB Housing Loan | 8.00% – 11.20% p.a. | 0.35% or ₹2,500 (min), max ₹15,000 + GST | Up to 90% of property / 1–30 Years |
| LIC HFL Home Loan | 8.00% p.a. onwards | ₹15,000–₹50,000 based on loan size + GST | ₹10L–₹3Cr / 5–30 Years |
| Axis Bank Home Loan | 8.75% – 9.65% p.a. | Up to 1% or ₹10,000 + GST | ₹3L–₹10Cr / 1–30 Years |
| Karnataka Bank Home Loan | 8.60% – 10.62% p.a. | Bank to inform | Up to ₹5Cr / 1–30 Years |
| IDFC Home Loan | 8.85% p.a. onwards | Up to 3% of loan amount | ₹1L–₹5Cr / Up to 30 Years |
| Bank of Baroda | 8.00% – 9.60% p.a. | Bank to inform | ₹1L–₹10Cr / Up to 30 Years |
| Canara Bank Home Loan | 7.90% – 10.75% p.a. | 0.50% (₹1,500–₹10,000) + GST | No limit / Up to 30 Years |
| Kotak Mahindra Bank | 8.65% p.a. onwards | Up to 2% + GST | Up to ₹40Cr / Up to 25 Years |
| DBS Home Loan | Bank to inform | Up to ₹10,000 | Up to ₹5Cr / 1–25 Years |
| Sundaram Home Finance | Bank to inform | Bank to inform | Contact bank |
| Bank of Maharashtra | 7.85% – 10.40% p.a. | Contact bank | Contact bank / 1–30 Years |
Source: Bankbazaar.com