HDFC Bank To BoB: Banks Slash Home Loan Rates After RBI's Repo Rate Cut - Who's Leading This Relief Move?

The home loan EMIs are likely to be lowered as top lenders have reduced their rates after RBI slashed the policy repo rate by 25 basis points (bps) to 5.25% on December 5.

In 2025, India's apex bank has reduced the key rate at which it lends to commercial banks by 125 basis points.

As a result of the latest repo rate reduction, the home loan relief sentiment seems to have tricked down across both public and private sector banks.

Banks That Slashed Home Loan Rates After RBI's December Rate Cut

Soon after India's apex bank slashed the policy repo rate, both private and public banking major such as Bank of Baroda, Bank of India, Punjab National Bank, Bank of Maharashtra, Indian Bank, and HDFC Bank responded with reductions in their rates. 

This lead to fall in rates for borrowers, whose loan interest is directly linked to RBI’s benchmark.

Notably, Bank of Maharashtra cut its home loan rate to 7.10% from 7.35%. Car loan rates saw a reduction  to 7.45 per cent, meanwhile, the bank waived processing fees, reducing the upfront cost for new borrowers.

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HDFC Bank has also reduced its marginal cost of funds-based lending rates by 5 basis points across tenures. Its MCLR now ranges between 8.30 per cent and 8.55 per cent, lower than the earlier 8.35–8.60% bandwidth.

The borrowers with loans tied to MCLR will see the change reflected at their next reset date.

Bank of Baroda has reduced its benchmark retail loan rate to 7.90% from 8.15%, offering a modest reduction in interest outgo for customers across home and other retail loans.

Meanwhile, Punjab National Bank altered its repo-linked lending rate to 8.10%, down from 8.35%. The new rate, effective 6 December, applies automatically to borrowers whose home loans are linked to this benchmark.

On the other hand, Indian Bank has cut its repo-linked benchmark rate to 7.95 per cent, while Bank of India has reduced the same to 8.10 per cent.

What Triggered RBI's Rate Cut In December?

This years has been a period of several RBI led rate cuts with the latest 25 bps repo rate cut fuelled by

Banks price a large portion of retail loans, especially home financing, against external benchmarks, such as the repo rate, or internal benchmarks, such as the MCLR. When the policy rate is lowered, banks typically revise these benchmarks downwards.