New Delhi: Reserve Bank of India has lowered the Repo Rate in an effort to trigger consumption. The central bank has announced a jumbo rate cut of 50 basis points, taking the repo rate down to 5.50 percent from 6.5 percent in early February. The third rate cut since February 2025 has taken the total policy rate cut to 100 basis points.
“It is imperative to continue to stimulate domestic private consumption and investment through policy levers to step up the growth momentum. This changed growth-inflation dynamic calls for not only continuing with the policy easing but also frontloading the rate cuts to support growth. Accordingly, the MPC voted to reduce the policy repo rate by 50 basis points to 5.50 percent,” said RBI Governor Sanjay Malhotra.
Following the rate cut, several banks have lowered their fixed income rates (FD rates) and are in the process of announcing a rate cut in home loans.
The revision in the repo rate cut would lower repo rate-linked home loans, providing credit to the borrowers at a lower rate. The step aims to lower monthly EMIs of borrowers, thereby significantly boosting their consumption appetite. Other banks soon will come up with new home loan rates. The existing home loan rates of several banks is given in a table;
| Bank | Starting interest rate (p.a. onwards) |
| Union Bank of India | 7.85% |
| Central Bank of India | 7.85% |
| State Bank of India | 8.00% |
| LIC Housing Finance | 8.00% |
| Canara Bank | 7.90% |
| Bank of Maharashtra | 7.35% |
| Punjab National Bank | 8.00% |
Multiplier effects of home loans
Home loans are one of the most potent loans to trigger consumption. Lower home loan rates can spur sales of flats and houses, which, in turn, can lead to higher consumption of a lot of commodities such as cement, steel, decorative paints, chemicals, electricals, consumer electronics, home decor items, sanitaryware etc. Moreover, the construction industry is labour-intensive and increased demand in these sectors easily translate into earning opportunity for people at the base of the economic pyramid. Therefore, an increased off take of home loans can spell a world of benefits to a number of sectors and a large number of people.
The Reserve Bank of India (RBI) has implemented a substantial 50 basis point reduction in the repo rate, bringing it down to 5.50%. Consequently, several banks are lowering their fixed deposit and home loan interest rates, resulting in reduced EMIs for borrowers. A table detailing current home loan rates from various banks is included. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
