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Personal Finance News

Repo cut effect: LIC Housing Finance, Union Bank cut home loan rates. How they compare to SBI, HDFC

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By Vani Dua

4 min read | Updated on December 24, 2025, 17:39 IST

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SUMMARY

The RBI has cut the repo rate by 125 basis points (bps) in 2025, making lending rates significantly cheaper across the country, as banks pass the benefit to the customers.

LIC Housing Finance home loan rate cut, Union Bank of India home loan interest rates

After the repo rate cut, many banks announced a reduction in their lending rates.

Public sector lender Union Bank of India has reduced its home loan rates by 30 basis points, bringing the rate down to 7.15%, following the RBI’s 25-basis-point repo rate cut. The new rates have been effective since December 18.

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The bank said, “With this revision, we aim to support homebuyers, vehicle buyers, and personal loan customers by lowering borrowing costs while maintaining prudent lending standards. The revised rates are applicable from December 18 and are subject to customer eligibility, credit profile, and other terms and conditions.”

Additionally, Union Bank is offering a 0.10% concession on eligible green home loans.

Meanwhile, LIC Housing Finance has also cut its home loan interest rates for new loans to 7.15%, effective December 22. The company said the move is aimed at boosting homebuyer sentiment and making home ownership more affordable.

Other banks reduce home loan rates

After the repo rate cut, many banks announced a reduction in their lending rates, including the top lenders in the country, like SBI and HDFC.

State Bank of India: SBI cut its lending rates by up to 25 bps effective December 15, passing the full benefit of the repo cut to the customers. SBI’s RLLR now stands at 7.50%.
HDFC Bank: HDFC Bank cut its lending rates by up to 5 bps after the repo rate cut announcement. Its home loan rates now start from 7.90%.
Bank of Maharashtra: Bank of Maharashtra reduced its lending rates by 25 bps, lowering the Repo-linked Lending Rate (RLLR) from 7.35% to 7.10%.
Punjab National Bank: PNB cut its lending rates by 25 bps, reducing the RLLR to 8.10% from 8.35%.
Canara Bank: Canara Bank also cut its Repo Linked Benchmark Lending Rate (RLLR) by 25 basis points, with effect from December 12, lowering it to 8%.
Indian Bank: Indian Bank cut its RLLR to 7.95% from 8.20% before. The revised rates came into effect from December 6.
Bank of Baroda: Bank of Baroda cut its Baroda Repo Based Lending Rate (BRLLR) to 7.90% from 8.15% before after the repo rate cut.
Indian Overseas Bank: IOB reduced its lending rates by up to 25 bps with effect from December 15. Read about all rates in detail here.
Major banks that reduced their RLLR after the recent repo rate cut:
BankRevised RLLR
State Bank of India (SBI)7.50%
Bank of Maharashtra7.10%
Punjab National Bank (PNB)8.10%
Canara Bank8.00%
Indian Bank7.95%
Bank of Baroda7.90%
Indian Overseas Bank (IOB)8.10%

Why are banks reducing their home loan rates?

Most lending rates in India are connected to the policy rate (repo rate), which is the rate at which the Reserve Bank of India (RBI) offers loans to banks. When the repo rate goes down, banks can borrow from the central bank at lower rates. In most cases, banks pass this benefit to customers, which is why lending rates decrease for them as well.

The RBI, in 2025, has cut the repo rate 4 times:

  • February 2025: 25 bps
  • April 2025: 25 bps
  • June 2025: 50 bps
  • December 2025: 25 bps

This brings the total rate cut for 2025 to 1.25%. Due to this, lending rates have decreased significantly across the country in 2025, giving more spending power to the customers.

After the recent repo rate cut in December, several lenders have reduced their interest rates, passing the benefit partially or fully to the customers. More banks are expected to join, making loans more affordable for individuals seeking to buy a home.

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About The Author

113ddd5b-aed5-4b73-8ee6-09992a603be0.jpg
Vani Dua is a journalism graduate from LSR College, Delhi. At Upstox, she writes on personal finance, commodities, business and markets. She is an avid reader and loves to spend her time weaving stories in her head.

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