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This December is proving quite beneficial for people planning to buy a home. The RBI reduced the repo rate by 25 basis points in its December policy, and consequently, several major banks have immediately lowered their home loan interest rates. Since February 2025, the RBI has reduced the repo rate by a total of 1.25 percent, bringing it down to 5.25 percent. This benefit is now directly reaching customers.

EMIs are decreasing, loans are becoming cheaper, and buying a home is becoming significantly easier for new buyers compared to before. Banks are offering their customers the cheapest home loans.

If you have a ₹50 lakh home loan for 20 years, a reduction in the interest rate from 8.5% to 7.25% results in a saving of approximately ₹3900 on your EMI.

Why have loans become cheaper?
After a reduction in the repo rate, banks' lending costs decrease. The RBI has clearly stated that both public and private banks should pass on this benefit to their customers. This is why many banks are reducing lending rates such as RLLR, RBLR, and MCLR.

Inflation is decreasing, the market is performing well, and liquidity is also adequate. Therefore, the RBI has made continuous rate cuts this year. After February, April, and June, a reduction has now also been made in December. This is why home loan interest rates are significantly cheaper compared to the beginning of 2025.

Which banks have reduced interest rates? See the new rates here:
1. HDFC Bank has reduced its MCLR
HDFC Bank has reduced its MCLR by up to 5 basis points.
The bank's MCLR now ranges from 8.30% to 8.55% depending on the tenure.
This will provide relief in EMIs for those with MCLR-linked loans.

2. PNB reduces RLLR
Punjab National Bank has reduced its RLLR from 8.35% to 8.10%.
This rate is effective from December 6, 2025.
RLLR is considered the most transparent, so customers directly benefit from this reduction.

3. Bank of Baroda reduces BRLLR
Bank of Baroda has reduced its Benchmark Retail Loan Lending Rate from 8.15% to 7.90%.
This is making home loans significantly cheaper for new customers.

4. Indian Bank reduces RLLR
Indian Bank has reduced its RLLR from 8.20% to 7.95%.
This rate is also effective from December 6.

5. Bank of India cuts RBLR
Bank of India has reduced its RBLR from 8.35% to 8.10%.
This change has been effective since December 5, 2025.

6. Bank of Maharashtra offers the cheapest home loan
Bank of Maharashtra has reduced its home loan rates from 7.35% to 7.10%.
This is considered the cheapest home loan available in the market currently.
The bank has also reduced car loan rates and offered discounts on processing fees.

What should you do?
If you have an existing home loan or are planning to take a new loan, these steps will help you save money:

Check your loan reset date.
Compare the new rates with your bank's rates.
Choose between reducing your EMI or shortening the loan tenure, whichever suits you best.
If your loan is on the old MCLR or base rate, you can consider shifting to a repo-linked loan. New loan applicants will benefit immediately.
Banks update their card rates immediately for new customers, so they benefit from lower interest rates right away. However, existing customers will receive this benefit on their next reset date. If your bank hasn't lowered rates yet, other banks may do so in the coming days as competition in the home loan market is increasing again.

Buying a home will be a little easier in 2026.

The 125 basis point reduction throughout this year has significantly lowered the cost of home loans. EMIs are now more affordable, and the environment for buying a home is improving. If you are considering buying a home, this could be a good time for you, as rates are still low, and more banks may update their rates in the coming months.

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