RBI rate cut: Will lower lending rates follow? Banks now charge these interest rates on home loans

RBI Policy: The Reserve Bank of India (RBI)'s monetary policy committee cut the repo rate by 25 basis points from 5.5% to 5.25% on Friday, implicitly urging banks to slash their lending rates on long-tenor loans, especially home loans.

Notably, home loans can be linked to base rate, MCLR (marginal cost of lending rate) or EBLR (external benchmark lending rate). The immediate impact of the repo rate cut is typically seen when the lending rate is linked to the external benchmark, aka the repo rate.

Although loans linked to MCLR are also meant to follow the same trajectory as the repo rate, the change, at times, is not proportionate. For example, a cut of 25 basis points may result in a cut of 10 bps.

Here, we list out the current variable interest rates charged by most top banks on home loans linked to the repo rate.

Home loan interest rates by top banks

HDFC Bank: The large private bank in the country charges 7.90% to 13.20%, i.e., a top-up of 2.40% to 7.7% on the repo rate of 5.5%. Now that the repo rate is slashed by 25 basis points, the resultant rates would be 7.65 to 12.95%

ICICI Bank: ICICI Bank's external benchmark lending rate (EBLR) is 9.20% (linked to the old repo rate of 5.5%). With repo rate now revised to 5.25%, the new EBLR is likely to be lower. This bank charges interest in the range of 8.75% to 9.8% per annum.

Kotak Mahindra Bank: Kotak Mahindra's home loan interest rates are in the range of 7.99% to 12% (for salaried individuals) and 7.99% to 13.30% (for self-employed), linked to the repo rate of 5.5%

Axis Bank: Based on the old repo rate of 5.5%, Axis Bank charges 8.35% to 9.10% on home loans from borrowers for a Cibil Score of 751 and above. And it charges 8.60% to 9.35% for a Cibil score of below 750.

State lenders

State Bank of India (SBI): Based on 5.5% repo rate, SBI's EBLR is 8.15%. Therefore, current home loan interest rates are 7.5% to 8.7%.

Union Bank of India: Based on the repo rate of 5.5%, this bank's external benchmark lending rate (EBLR) is 8.25%. Current interest rates are in the range of 7.45% to 10% based on borrower's credit score.

Canara Bank: This lender's lending rate is 8.25% per annum. This bank charges interest in the range of 7.40% to 10.25%.

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