Major banks including SBI, HDFC Bank, ICICI Bank and Kotak Mahindra Bank reduced home loan interest rates to 8.40% per annum following the RBI's 25 basis point repo rate cut in February 2026, with the transmission being quicker than in previous rate cut cycles. A borrower with an existing Rs 50 lakh home loan at 20-year tenure will see their monthly EMI fall by approximately Rs 820 to Rs 1,200 depending on the remaining loan tenure.
For new home loan borrowers, the lower rate environment significantly improves affordability. On a Rs 75 lakh loan with a 20-year tenure, a rate reduction from 9% to 8.4% reduces the monthly EMI by Rs 2,880 and saves Rs 6.9 lakh in total interest over the full loan tenure. This improved affordability is expected to boost housing demand, particularly in the Rs 50-80 lakh price segment where many first-time homebuyers are concentrated.
Existing borrowers should contact their bank to ensure the rate reduction has been applied to their loan account, as banks sometimes delay transmission or apply it only to new borrowers. Under the RBI's guidelines, banks are required to transmit rate cuts to floating rate borrowers on the reset dates specified in the loan agreement. Borrowers on MCLR-linked loans may receive the benefit at their next annual reset, while those on external benchmark-linked rates (repo or T-bill) get the benefit within 90 days of the rate change as mandated by the regulator.
