Home Loan Interest Rate Cut

The Reserve Bank of India has cut the repo rate by 25 basis points to 6%, bringing good news for home loan borrowers with floating rate loans. Explore more in the blog.
Home Loan
2 min
12 May 2025
The Reserve Bank of India has announced another home loan interest rate cut, bringing its repo rate down by 25 basis points to 6%. This marks the second home loan interest rate cut of 2025. For millions of homeowners and potential buyers, this news brings hope of lower EMIs and more affordable housing. The cut follows a previous reduction in February, showing RBI's commitment to support growth in the housing sector. With banks expected to pass on these benefits to customers, many Indians may soon enjoy lower monthly payments on their home loans.

This article will explore how the home loan interest rate cut affects you and what steps you can take to benefit from this change.

Impact of RBI repo rate cut

The recent home loan interest rate cut by RBI has sent ripples through the banking sector. Major public sector banks have already announced reductions in their lending rates. These banks have adjusted their external benchmark-linked lending rates, making loans more affordable for the average Indian. The repo rate serves as the standard benchmark for most banks when setting their interest rates.

When the RBI cuts rates, banks can borrow money at lower costs. This saving gets passed on to you, the customer. Check your eligibility for Bajaj Housing Finance Home Loans to see how these new rates might benefit you. You may already be eligible – find out by entering your mobile number and OTP.

How does it affect borrowers?

The home loan interest rate cut directly impacts your wallet if you have a floating interest rate loan. Since most banks use the repo rate as their external benchmark, a lower repo rate means lower interest costs for you. For instance, a 25 basis point reduction on a Rs. 50 lakh loan can lower your EMI by Rs. 800-1,000 per month.

This change happens fastest for repo-linked home loans, which adjust almost immediately after the RBI announcement. Fixed-rate borrowers, however, will not see any change in their EMIs. The full impact typically takes 1-3 months to reflect in your account as banks update their lending rates.

EMIs set to fall, but not for everyone

While the home loan interest rate cut brings good news, not all borrowers will benefit equally. Those with floating rate loans linked to the repo rate will see the quickest relief. According to banking experts, the lowest home loan rates may soon drop below 8% for prime borrowers with credit scores above 750.

However, many Indians still have loans based on older benchmarks like MCLR (Marginal Cost of Funds based Lending Rate) or even the base rate. These loans respond more slowly to RBI rate cuts. If you are paying 50 basis points or more above current market rates, consider switching to a repo-linked home loan to save money.

Bajaj Finserv offers home loans with interest rates starting from just 7.99%*  p.a.. Check your loan offers today to see if you qualify for better rates. You may already be eligible – find out by entering your mobile number and OTP.

Here is how current home loan rates compare across lenders:

BanksStarting interest rate (p.a.)
Bajaj Finserv7.99%*  p.a. onwards
Kotak Mahindra Bank8.65% p.a. onwards
Union Bank of India8.10% p.a. onwards
Bank of Baroda8.15% p.a. onwards
Central Bank of India8.10% p.a. onwards
State Bank of India8.25% p.a. onwards


Why the cut matters now

The timing of this home loan interest rate cut is significant. With inflation cooling down and surplus liquidity in the banking system, the RBI now has room to focus on boosting demand. System liquidity crossed Rs. 1.5 lakh crore in April, creating better lending conditions for banks.

For potential homebuyers who have been waiting on the sidelines, this rate cut provides the push they need. Lower EMIs make home ownership more affordable, especially in the mid-income segment. This could spark increased activity in the real estate market after months of cautious buying.

For existing borrowers, this is the perfect time to review your loan terms. Check if you qualify for a better rate with Bajaj Finserv, which offer interest rates starting from 7.99%*  p.a. and loan amounts up to Rs. 15 crore*. You may already be eligible – check your offers now by entering your mobile number and OTP.

Rising home prices add pressure

While the home loan interest rate cut offers relief, home prices continue to climb. According to ANAROCK Research, housing prices in India's top seven cities jumped 17% year-on-year by Q1 2025. In NCR and Bengaluru, prices rose by a steep 34% and 20% respectively. The average rate in these cities is now Rs. 8,835 per sq. ft.

This price increase puts pressure on buyers to act quickly. Even with lower interest rates, waiting too long might mean paying more for the same property. Banks may not pass on the full benefit of rate cuts immediately due to their own margin pressures and funding costs.

In this scenario, finding a lender with competitive rates becomes even more crucial. Bajaj Finserv stands out with interest rates starting from 7.99%*  p.a. and quick loan approval within 48 hours*. Check your eligibility today to lock in favourable terms before home prices rise further. You may already be eligible – find out by entering your mobile number and OTP.

What should borrowers do now?

With the latest home loan interest rate cut, smart borrowers should take these steps:

  • Check your loan benchmark: If your loan is not repo-linked, consider switching to take advantage of immediate rate reductions. Bajaj Finserv offers flexible repayment options with terms up to 32 years.
  • Negotiate with your lender: If your credit score has improved since you took the loan, ask for a better rate. Many banks will reduce rates for valuable customers rather than lose them.
  • Consider balance transfer: A home loan balance transfer to Bajaj Finserv could save you money. They offer top-up loans up to Rs. 1 crore with no restriction on usage.
  • Review your EMI vs. tenure: When rates fall, you can either reduce your EMI or keep the same EMI and reduce your loan tenure. The latter saves more money in the long term.
  • Use rate cuts wisely: If your EMI decreases, consider using the extra money to make partial prepayments on your loan. This could save lakhs in interest over the life of the loan.
With the RBI's accommodative stance, more rate cuts could follow if inflation stays controlled. This makes it an excellent time to review your home loan options.

How to apply for Bajaj Finserv home loan

Getting a home loan from Bajaj Finserv is straightforward and hassle-free:

  • Visit the website: Go to Bajaj Finserv's home loan page and click "APPLY."
  • Enter basic details: Provide your name, mobile number, and employment type.
  • Select loan type: Choose from fresh home loan, balance transfer, or top-up options.
  • Complete verification: Submit your OTP and share additional details like income and required loan amount.
  • Submit application: After entering your date of birth, PAN, and other required information, submit your application.
A Bajaj Finserv representative will contact you to guide you through the remaining steps. With approval possible in just 48 hours*, you can move quickly to secure your dream home.

Eligibility criteria to get home loan from Bajaj Finserv

To qualify for a Bajaj Housing Finance Home Loan, you need to meet these requirements:

  • Nationality: You must be an Indian citizen living in India.
  • Age: Salaried applicants should be 23-67 years old; self-employed professionals 23-70 years (upper limit at loan maturity).
  • Credit score: A CIBIL score of 725 or higher improves your chances of approval.
  • Occupation: You should be a salaried employee, professional individual, or self-employed person.
Documents required for home loan application include KYC documents, proof of income (salary slips for employed, P&L statements for self-employed), business proof if applicable, and six months of bank statements.

With home loan interest rates starting from 7.99%*  p.a., Bajaj Finserv offers some of the most competitive terms in the market. Check your eligibility now and take advantage of the current rate environment. You may already be eligible – find out by entering your mobile number and OTP.

Conclusion: Making the most of lower interest rates

The recent home loan interest rate cut by RBI presents a golden opportunity for both existing borrowers and potential homebuyers. With rates potentially dropping below 8% for prime borrowers, now is the time to act. Bajaj Finserv stands ready to help you capitalise on this favourable environment with their comprehensive home loan solutions.

Bajaj Housing Finance Home Loans offer several key advantages:

Interest rates starting from just 7.99%*  p.a..

Loan amounts up to Rs. 15 crore* based on eligibility.

Flexible repayment terms up to 32 years.

Quick approval within 48 hours*.

No foreclosure fees for individual borrowers with floating interest rates.

Hassle-free application with doorstep document pickup.

Balance transfer facility with top-up loans up to Rs. 1 crore.

Whether you are looking to buy your first home, upgrade to a larger property, or refinance an existing loan, the current rate environment makes this an ideal time. With Bajaj Finserv's customer-friendly approach and competitive rates, you can secure your dream home while keeping your EMIs affordable.

Do not miss this opportunity to benefit from the home loan interest rate cut. Check your eligibility for a Bajaj Housing Finance Home Loan today and take the first step toward affordable home ownership. You may already be eligible – find out by entering your mobile number and OTP.

Frequently asked questions

Has RBI reduced home loan interest rates?
RBI has cut the repo rate by 25 basis points to 6% marking the second such cut of 2025. This directly impacts home loan interest rates by reducing them. Make the most of the back-to-back repo rate cuts in 2025 by applying for a home loan from Bajaj Finserv. You may already qualify for competitive rates – check your eligibility by sharing your mobile number and verifying with an OTP.

What is 25 bps mean?
25 bps (basis points) equals 0.25%. When RBI cuts rates by 25 bps, it means interest rates decrease by 0.25 percentage points.

Can we ask bank to reduce home loan interest rate?
Yes, you can negotiate with your bank for lower rates, especially if your credit score has improved or market rates have fallen.

How much is 1 bps?
1 basis point (bps) equals 0.01%. It is the smallest unit used to measure interest rate changes.

What is 75 basis points?
75 basis points equals 0.75%. When rates change by 75 bps, it represents a 0.75 percentage point adjustment.

How much is 400 bps?
400 basis points equals 4%. A 400-bps change would be a significant 4 percentage point shift in interest rates.

What is the current home loan interest rate per RBI?
RBI does not set home loan rates directly. It determines repo rates which in turn impacts home loan rates. Check your eligibility with Bajaj Finserv offering rates from 7.99%*  p.a.. You may already be eligible—find out by entering your mobile number and OTP.

How to get the lowest home loan rate?
Maintain a credit score above 750, compare multiple lenders, and consider Bajaj Finserv's competitive rates. You may already be eligible – check your offers by entering your mobile number and OTP.

Show More Show Less

Bajaj Finserv App for All Your Financial Needs and Goals

Trusted by 50 million+ customers in India, Bajaj Finserv App is a one-stop solution for all your financial needs and goals.

You can use the Bajaj Finserv App to:

  • Apply for loans online, such as Instant Personal Loan, Home Loan, Business Loan, Gold Loan, and more.
  • Explore and apply for co-branded credit cards online.
  • Invest in fixed deposits and mutual funds on the app.
  • Choose from multiple insurance for your health, motor and even pocket insurance, from various insurance providers.
  • Pay and manage your bills and recharges using the BBPS platform. Use Bajaj Pay and Bajaj Wallet for quick and simple money transfers and transactions.
  • Apply for Insta EMI Card and get a pre-approved limit on the app. Explore over 1 million products on the app that can be purchased from a partner store on Easy EMIs.
  • Shop from over 100+ brand partners that offer a diverse range of products and services.
  • Use specialised tools like EMI calculators, SIP Calculators
  • Check your credit score, download loan statements and even get quick customer support—all on the app.
Download the Bajaj Finserv App today and experience the convenience of managing your finances on one app.

Do more with the Bajaj Finserv App!

UPI, Wallet, Loans, Investments, Cards, Shopping and more

Disclaimer

1. Bajaj Finance Limited (“BFL”) is a Non-Banking Finance Company (NBFC) and Prepaid Payment Instrument Issuer offering financial services viz., loans, deposits, Bajaj Pay Wallet, Bajaj Pay UPI, bill payments and third-party wealth management products. The details mentioned in the respective product/ service document shall prevail in case of any inconsistency with respect to the information referring to BFL products and services on this page.

2. All other information, such as, the images, facts, statistics etc. (“information”) that are in addition to the details mentioned in the BFL’s product/ service document and which are being displayed on this page only depicts the summary of the information sourced from the public domain. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information. Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same.