I’m a financial analyst who is tracking the home loan market very closely and I have seen first hand the drastic reduction in home loan rates after RBI’s bold cut in the repo rate by 50 basis points (bps) in June 2025. In a series of cuts totaling 100 bps since February, the central bank has pulled borrowing costs to near-decade low levels, making homeownership within greater reach than ever before.
Here, in this post, I’ll drill down the top banks with the lowest home loan rates after RBI announced its decision, what it means for borrowers, and tips to sign off the best deal on your next home purchase/refinance.
How RBI Rate Cut Changes the Home Loan Market
The RBI has reduced the repo rate today to 5.5%, and the Cash Reserve Ratio (CRR) has also been reduced by 100 bps to 3%. This twofold maneuver boosts liquidity in the banking system and leads lenders to share the benefit with consumers in the form of low interest rate.
For home loan borrowers, that translates to:
- Faster EMI cuts for loans linked to external benchmarks like the repo rate.
- Increased affordability, in particular for first-time home buyers and middle-income families.
- Refinancing options for those who continue to hold older MCLR-linked loans.
Banks have already began the process of updating their lending rates, with some now offering sub-8% interest rates — a figure that has not been witnessed since early 2022.
The Best Offered By The Best: Top Home Loan Rates for June 2025
1. Union Bank of India – From 7.85% p.a.
Union Bank has become one of the most competitive public sector lenders providing loan at 7.85% level for eligible customers. The fast channeling of the RBI’s rate cuts makes them a good choice for those who want affordability without sacrificing the trust factor.
2. Central Bank of India – 7.85% p.a. onwards
Yet another public sector bank, Central Bank of India, has fixed its home loan rates at par with the market’s best—starting at 7.85%. Their wealth of government-backed initiatives and first-time buyer initiatives only serves to make the industry even more attractive.
3. State Bank of India (SBI) – 8.00% p.a.
India’s largest lender SBI has reduced its rates to 8.00 per cent (with additional concessions for women borrowers and salaried individuals). Their Repo-Linked Lending Rate (RLLR) will make the monetary policy transmission faster for the borrowers.
4. Bank of Baroda – 8.00% to 9.50% pa
Bank of Baroda’s rates differ depending on the quantum of loan and the credit profile of the borrower, but their tier 1 now starts at 8.00%, making this a good option for borrowers who require flexibility in repayment options.
5. Kotak Mahindra Bank – 8.65% p.a.
Up to Details regarding Kotak Mahindra Bank Business Loan are below: Category: Loan (Business Loans) Eligibility: Businesses, self-employed professionals, non-professionals, entities that are qualified for a loan.
Between private banks, Kotak Mahindra offers loans at a starting rate of 8.65%, little higher than public banks, but the digital processing and customer servicing of the bank are excellent.
6. HDFC Home Loans – 8.50% p.a. and Above
Mortgage-market leader HDFC has cut rates to 8.50%, with extra benefits for its high credit score and pre-approved customers.
7. Axis Bank – 8.75% p.a and above
Rates at the Axis bank are still on the upper side at (8.75%) but they typically have another market which is specialized in loan products for self-employed professionals and NRIs.
The Factors Key to Determining Your Home Loan Rate
While RBI’s rate cuts provide the base, your ultimate lending rate is a function of a number of factors:
1. Credit Score Matters Even More Than Before
Borrowers with credit scores of 750 or higher are getting the best rates, averaging a couple of tenths of a percentage point below the typical offer. It’s important to keep a good credit profile.
2. Loan-to-Value (LTV) Ratio
A greater down payment (less LTV) decreases the lender’s risk – and typically means better rates. Your goal is to have 20 percent down to get preferential pricing.
3. Stability of Employment & Proof of Income
Those who have regular jobs with good job tenure would get better deals as compared to applicants who are self-employed but there are some banks also have custom product offerings for freelancers and businessmen.
4. Choosing the Right Benchmark
A repo-linked loan offer a faster transmission of rate cuts to borrowers compared with MCLR-linked loans as the latter takes some time before their reset period kicks in.
Are you doing the right thing by refinancing your home loan?
If you took a home loan before 2019, the probability is high that you are still under MCLR or Base Rate regime and thus possibly missing out on recent rate cuts. This is when refinancing makes sense:
- Your present rate is above 8.5%: Could save lakhs over loan tenure, if opt for repo-linked loan.
- You’re in the first few years of repaying: Maximum interest is paid up front, which means refinancing now can help you save the most.
- Your credit score is better: Assuming your score today is stronger, you may be in a position to get better terms.
As balance transfer is available with very low processing charges with banks such as SBI, HDFC, Union Bank and can be a great move towards savings in the long run.
The Road Ahead: Will Rates Remain Lower?
With inflation in check and RBI changed to a neutral stance, analysts expect at least 25 bps more cuts in 2025. In such an event, the home loan rates may fall below the 7.75% mark as well, leading to an even more favourable market for borrowers.
But uncertainty in the world economy and oil prices mean that factors could change in the future. My advice? “Space exploration is not going to ever end, and I’m not going to run out of paper,” he said, “so wait for a good one, but don’t wait forever, because eventually a good one is going to disappear and the macroeconomic context could suddenly change.”
Final Thoughts: Taking Advantage of Lower Home Loan Rates
The RBI’s aggressive rate cuts have turned the home loan segment in India on its head, providing a godsend to thousands of borrowers. Whether you are purchasing your first home, a new home or refinancing, it could be an ideal time to get a great mortgage.
You may take a quote from three banks and only then finalize a lender and negotiate the processing fee, do not forget to discuss transparency in all fees. Making an informed decision today could save you thousands of dollars over the next 20 years.
If you find this analysis useful, share it with fellow homebuyers who, like you, are in the process of figuring out this market. Happy house hunting!