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A few days after the Reserve Bank of India (RBI) reduced the repo rate to 6% in its April Monetary Policy Committee (MPC) meeting, public sector lender Bank of India (BOI) announced a cut in its home loan interest rates. On Monday, the bank lowered its home loan rates by 25 basis points for all customers, including both new and existing borrowers.
With this revision, the home loan interest rate now stands at 7.90% per annum, down from the earlier rate of 8.10% per annum. However, the final interest rate offered to an individual will still depend on their CIBIL score, which reflects their creditworthiness.
The revised rates will come into effect starting April 15, 2025.
For home loan borrowers, this is likely to bring some financial relief. A reduction in the repo rate lowers the cost at which banks borrow from the RBI. If banks pass on the benefit, it can lead to reduced home loan interest rates and lower EMIs, easing the financial burden on households. With inflation dipping below 4% and concerns rising over a potential economic slowdown, the RBI has urged banks to pass on the benefits of lower borrowing costs to consumers.
Industry experts view the rate cut move as a boost for the housing sector. The rate cut is a positive step for homebuyers, making EMIs more affordable, especially with floating rate loans. A 25-basis-point reduction on a ₹50 lakh loan over 30 years could lower EMIs by around ₹900 per month.
The broader real estate market is also expected to benefit. Developers, too, may see improved access to cheaper financing, potentially accelerating growth across the housing sector.
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