Latest home loan interest rate updates from major Indian banks (2026 Update)

RBI's December rate cut takes home loan rates to multi-year lows

Home loan borrowers across India are seeing their EMIs shrink for the fifth time this calendar year. On December 5, 2025, the Reserve Bank of India announced its monetary policy decision, with the new policy led by Governor Sanjay Malhotra deciding to cut the repo rate by 25 basis points from 5.50% to 5.25% while keeping a neutral stance. Within days, every major public-sector lender and several private banks revised their lending rates downward, and home loan interest rates at top banks are now starting in the 7.10% to 7.50% range — levels last seen during the pandemic era.

For an Indian household with a ₹50 lakh home loan running over 20 years, even a 25 basis-point cut translates to meaningful savings over the loan's life. The cumulative impact of 2025's repo rate journey is more dramatic still: between February and December 2025, the RBI cut the repo rate by a cumulative 125 basis points, bringing it down from 6.50% to 5.25% to support economic growth. If your bank has passed through the full reduction and your loan is on a floating, repo-linked rate, you are paying noticeably less today than you were last Diwali.

This article walks through what each major bank has done, what the new rate sheet looks like, and — most importantly — what an Indian borrower should actually do about it: stay put, refinance, or shorten tenure.

Why this rate cycle matters for Indian homeowners

The pass-through from a repo cut to your EMI is rarely instant, but the December 2025 cycle has been faster than usual because most floating home loans in India are now linked to external benchmarks like the RLLR (Repo Linked Lending Rate) or EBLR (External Benchmark Lending Rate). A repo rate cut trims the cost of borrowing for commercial banks, leading to lower interest rates on loans, including home loans, and the rate adjustments by SBI, HDFC, ICICI, Axis, and Canara Bank closely follow the central bank's move.

For a salaried professional in Bangalore or Mumbai earning ₹15-25 lakh per annum, a typical ₹60-80 lakh home loan repriced from 8.50% down to around 7.25% can free up between ₹3,000 and ₹5,000 in monthly cash flow. One borrower, after the earlier rate cuts, saw their interest rate come down from around 8.50% to 7.25%, reducing the EMI from about ₹43,391 to ₹39,519 — saving roughly ₹3,000 every month. Over a 20-year loan, those savings compound into lakhs of rupees.

The flip side: if you are on an MCLR-linked or fixed-rate loan, the benefit is delayed or absent. If your loan is MCLR-based, the change may take time , and fixed-rate borrowers see no change at all unless they refinance to a floating product.

Bank-by-bank: what changed in December 2025

Within two weeks of the December 5 RBI announcement, at least nine major banks had revised their lending benchmarks. The depth of the cut varied — most matched the full 25 bps, while some private banks passed on smaller portions.

Public sector banks

• State Bank of India (SBI): India's largest lender has been at the forefront of the easing cycle. SBI's Repo Linked Lending Rate (RLLR) was lowered to 7.75%, while the External Benchmark Lending Rate (EBLR) was brought down from 8.65% to 8.15%, with these new rates taking effect on June 15, 2025. SBI's home loan card rates after the December cut now sit comfortably in the mid-7% range for prime borrowers.
• Bank of Baroda: Bank of Baroda lowered its Baroda Repo Linked Lending Rate to 7.90 per cent from 8.15 per cent, with the revised rates effective from December 6, 2025, benefitting both new and existing borrowers.
• Canara Bank: Canara Bank cut its repo-linked benchmark lending rate to 8 per cent from 8.25 per cent, effective December 12. Canara has been among the most aggressive PSU lenders this cycle, and its home loan card rate is now among the lowest in the public-sector pack.
• Punjab National Bank (PNB): PNB cut its lending rates by 25 bps, reducing the RLLR to 8.10% from 8.35%.
• Bank of Maharashtra: Bank of Maharashtra cut its lending rates by 25 bps, lowering them from 7.35% to 7.10% (RLLR), with the revised rates coming into effect from December 6. Bank of Maharashtra's RLLR is now arguably the lowest among scheduled commercial banks for repo-linked retail loans.

Private sector banks

• HDFC Bank: India's largest private sector bank, HDFC Bank, cut its lending rates by up to 5 bps after the RBI move. The pass-through has been smaller than most PSUs, reflecting HDFC's funding mix.
• ICICI Bank: ICICI's Home Loan interest rates currently start at 7.45% p.a. , putting it among the most competitive private lenders post the December cycle.
• Axis Bank: For borrowers with a CIBIL score of 751 and above, the rate is 8.35 per cent to 9.10 per cent; for those below 750, it becomes 8.6 per cent to 9.35 per cent. Axis remains positioned slightly above SBI and HDFC for prime borrowers.
• Kotak Mahindra Bank: Kotak Mahindra Bank's rates of interest range from 7.99 per cent to 9.8 per cent.

Housing finance companies

Banks aren't the only place to compare. After the recent repo rate cut in December, several lenders reduced their interest rates, passing the benefit partially or fully to customers, and more banks are expected to join, making loans more affordable for individuals seeking to borrow. LIC Housing Finance and Union Bank were among the first to revise rates after December 5, and other housing finance companies (HFCs) typically follow within four to six weeks.

The cumulative picture: what 2025 looks like for borrowers

To understand why the December cut feels significant, it helps to zoom out. The 2025 rate cycle didn't begin in December — it began in February, when the RBI delivered the first cut after a long pause. SBI moved promptly that round: the revised lending rates came into effect on February 15, 2025, following the Reserve Bank of India's recent cut in the repo rate by 25 basis points (bps) from 6.50% to 6.25% during its MPC meeting last week.

By mid-2025, several PSU banks had already brought home loan card rates below 8%. PNB and Bank of India had reduced their RLLR from 8.85% to 8.35%, while Bank of Baroda cut its RLLR from 8.65% to 8.15% earlier in the year. The competition pulled headline rates lower across the board.

The April 2025 round saw SBI deliver another quarter-point cut: with that round of reduction, SBI's Repo Linked Lending Rate (RLLR) came down by 25 basis points to 8.25 per cent, while it also reduced the External Benchmark Based Lending Rate (EBLR) by similar basis points to 8.65 per cent. Each successive round compounded the effect.

By the time the December cut arrived, the lending environment had shifted from "high and tight" to "low and accommodative." Home loans now start at 7.10% p.a. from many lenders, with public sector banks generally offering the lowest home loan interest rates.

What an Indian borrower should actually do

Lower rates are only useful if you act on them. Here's a practical framework based on three borrower profiles common in Indian households.

1. You are on a floating, repo-linked loan with your existing bank

You should already see a rate reset on your next quarterly review (most banks reset every three months from the loan disbursal anniversary). Two questions to ask:

• Has my bank actually passed on the full 25 bps from December? Check your latest sanction letter or net banking loan account page for the current applicable rate.
• Should I keep the EMI the same and shorten the tenure, or take the lower EMI? The math almost always favours keeping the EMI constant — you finish the loan years earlier and save substantially on interest.

2. You are on an older MCLR or base-rate loan

This is the group losing the most. Banks pass on repo cuts to MCLR loans only at reset dates and often partially. With interest rates trending downward, refinancing — or balance transfer of home loans — can be an effective way to reduce your interest burden. If your current rate is more than 50 basis points above the best repo-linked rate available in the market, a balance transfer is usually worth the paperwork and processing fee.

Before signing anything, plug your current outstanding, current rate, remaining tenure, and the new offered rate into an EMI calculator to see the actual difference. You can calculate the new EMI on your existing home loan with the SabTools EMI Calculator → and compare it side-by-side with a refinanced scenario, including processing fees, to know whether the move pays for itself.

The savings can be substantial. A real example from November 2025: a borrower with ₹68 lakh outstanding at 8.40% transferred to SBI at 7.10%, with a monthly saving of ₹9,800 and total interest saved of ₹22 lakh. Not every borrower will see numbers that large, but the principle is the same — every 50 bps of rate reduction on a 20-year home loan compounds into lakhs.

3. You are a first-time home loan applicant in NCR, Pune, or any tier-1 city

This is arguably the best entry point in three years. Negotiate aggressively — banks are competing for prime customers, and CIBIL scores above 750 unlock the lowest published rates. Watch processing fees, prepayment terms (most repo-linked floating loans allow free prepayment), and insurance bundling, which often inflates the effective cost.

The deposit side: a parallel story

Falling lending rates have a mirror effect on deposits. The Reserve Bank of India cut the repo rate to 5.25% on December 5 from the earlier 5.5%, and a repo rate cut trims the cost of borrowing for commercial banks, leading to lower interest rates on loans, including home loans — but it also pulls fixed deposit rates down. SBI, HDFC, ICICI, Axis and Canara Bank all revised FD rates after the December move. Senior citizens and conservative savers relying on FD income for monthly expenses are seeing yields drift below 7% on most tenures.

For Indian households balancing home loan EMIs with savings goals, this is the moment to think holistically: lock long-tenure FDs sooner rather than later, and consider whether some of the freed-up EMI cash flow should redirect into equity SIPs to compensate for lower deposit yields.

What to watch in the next two quarters

The central question for early FY 2026-27 is whether the RBI will cut further or pause. After the earlier rate cuts, home loan EMIs have stayed stable in the most recent MPC meeting, with borrowers having saved up to ₹13.9 lakh on long-tenure loans over the cumulative cycle. The neutral stance signals the RBI wants to see the impact of 125 bps of cuts work through the economy before committing to more.

Three things will shape the rate trajectory:

1. Inflation prints: If CPI stays comfortably within the 4% target band, the case for one more cut in FY 2026-27 strengthens.
2. Liquidity conditions: The RBI has been managing surplus liquidity carefully. Continued surplus would support deeper transmission to lending rates even without further repo action.
3. Competitive dynamics among banks: Some PSU banks may cut card rates further to chase home loan market share, especially in the affordable housing segment.

Bottom line for Indian readers

If you took a home loan between 2022 and early 2024, you are likely sitting on a contract that's now 100-150 bps above prevailing rates. That gap is real money — anywhere from ₹2,000 to ₹8,000 per month on a typical metro home loan. The RBI has reduced the repo rate to 5.25% as of 5 December 2025, and if you have a floating-rate loan linked to the repo rate, your EMI may decrease in the coming months, depending on your lender's policy.

Three concrete actions for the next 30 days:

• Pull your latest loan statement and confirm whether your rate has already been reset post-December 5. If not, contact your branch.
• Run the numbers on a balance transfer if your current rate is more than 50 bps above the best repo-linked rate at SBI, Bank of Baroda, Canara Bank, or Bank of Maharashtra. Factor in processing fees of 0.25% to 0.50% of the outstanding.
• Consider keeping your EMI constant rather than reducing it. Shorter tenure means dramatically less interest paid over the life of the loan.

The 2025 rate cycle has been one of the friendliest periods for Indian home loan borrowers in recent memory. Whether the RBI continues easing or pauses through FY 2026-27, the rates available today are genuinely attractive — and the borrowers who benefit most will be the ones who take a few hours this month to actually run their numbers and call their bank.