From SBI to HDFC Bank, Lenders Lower Home Loan Rates After RBI’s December Repo Cut

Following the RBI’s December policy decision, major public and private banks have begun reducing home loan rates. The move is expected to ease borrowing costs and revive housing demand.

Banks cut home loan rates in December 2025 after the RBI reduced the repo rate by 25 basis points, signalling cheaper borrowing and possible further easing ahead.

The Reserve Bank of India, led by Governor Sanjay Malhotra, lowered the repo rate by 25 basis points to 5.25 percent at the Monetary Policy Committee (MPC) meeting held on 5 December 2025. This marked the fourth rate cut in 2025, taking the cumulative reduction for the year to 125 basis points. 

The decision was announced in the RBI MPC Resolution dated 5 December 2025, available on rbi.org.in → Monetary Policy → MPC Resolutions.

What Is the Issue: Why Banks Are Lowering Home Loan Rates Now?

Soon after the policy announcement, banks cut home loan rates to pass on the benefit of the repo rate reduction to borrowers. The MPC also retained a neutral policy stance, indicating room for further rate cuts if inflation remains under control.

Lower lending rates are expected to support housing demand, especially as inflation eased sharply in recent months. According to RBI data, retail inflation fell to 0.25 percent in October 2025 and 0.71 percent in November 2025, mainly due to lower food prices.

This macro environment has encouraged lenders to adjust repo-linked and external benchmark-linked loan rates.

Main Developments: Which Banks Cut Rates and By How Much?

Several public and private sector banks announced rate reductions across different lending benchmarks.
 

State Bank of India reduced rates across MCLR, EBLR, RLLR and base rate, passing on the full benefit of the repo cut. Bank of Maharashtra said its home loans starting at 7.10 percent are among the lowest in the industry.

This is the third time in 2025 that banks cut home loan rates following RBI action.

What Changed in SBI’s Lending Benchmarks

SBI also reduced its RLLR to 7.50 percent and EBLR to 8.15 percent, benefiting borrowers with repo-linked loans.

The December decision is part of a broader easing cycle. RBI has cut rates four times this year as inflation moderated and growth risks emerged.

In its RBI Annual Report 2024–25, published in August 2025 and available on rbi.org.in → Publications → Annual Reports, the central bank noted that rate transmission to retail loans had improved but required continued monitoring.

What Bank Officials and Analysts Are Saying?

Banks say the rate reductions reflect their commitment to making retail loans affordable. Analysts believe the cumulative impact of lower rates could revive housing demand in early 2026, especially for first-time buyers.

Borrowers are also being advised to review their loan structure and consider refinancing or prepayment strategies to maximise savings.

LoansJagat advises home loan borrowers to use RBI-led rate cuts as an opportunity to actively review their loan structure rather than remain passive. Borrowers with repo-linked or external benchmark–linked loans should check whether banks have fully passed on the rate reduction and request a rate reset if required. 

Those on older MCLR- or base-rate loans may benefit from switching to lower-rate regimes or exploring a balance transfer if the interest savings outweigh the switching costs.

Conclusion

As banks cut home loan rates after the December repo reduction, borrowers stand to benefit from cheaper credit. The trend also signals RBI’s continued focus on supporting growth through monetary easing.

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