29th, Apr, 2025

LIC Housing Finance Lowers Home Loan Rates as RBI Cuts Repo Rate

In a move that is expected to make home loans more affordable for millions, LIC Housing Finance has reduced its prime lending rate by 25 basis points. The change comes shortly after the Reserve Bank of India (RBI) cut the repo rate to 6%, marking the second such cut this year.

This latest rate revision will be effective from April 28, 2025, and will apply to both new and existing borrowers of LIC Housing Finance. With the revised rates, home loan interest now starts at 8%, offering significant savings to borrowers.

What the New Rates Mean for Borrowers

The reduction in lending rates is expected to ease the financial burden on households and boost homebuyer sentiment, particularly in the affordable housing segment. This move is in line with broader efforts by the RBI to stimulate economic activity and increase credit flow.

“The interest rate cuts are in line with the RBI’s decisions and current market scenario. We believe this move will boost consumer sentiments and stimulate housing demand,” said Tribhuwan Adhikari, MD & CEO of LIC HFL.

Expert Take: Savings Depend on Loan Type

Industry experts have welcomed the decision, noting that the real benefit for borrowers depends on the type of loan they have.

“The RBI’s repo rate cut is a welcome step toward easing financial pressure on households,” said Siddarth Jain, CFO at MinEMI. “While banks have started lowering home loan rates, the real benefit depends on the borrower’s loan structure.”

He added that RLLR-linked borrowers (Repo Linked Lending Rate) will see automatic reductions on their reset dates, while MCLR or fixed-rate borrowers may need to initiate a switch or refinance.

A smart strategy, according to Jain, is to keep EMIs constant even as interest rates drop. This helps reduce the loan tenure significantly and results in large savings in interest payments over time.

How Much Can You Save? (EMI Comparison)

Here’s a simple breakdown of how a 0.25% interest rate reduction can impact your monthly EMI and total repayment:

For a ₹20 Lakh Loan Over 20 Years

For a ₹30 Lakh Loan Over 20 Years

Note: These calculations are based on standard EMI formulas and may vary slightly depending on lender terms and processing fees.

Conclusion

The reduction in home loan rates is a welcome development for both prospective and current borrowers, especially those considering buying a home in the near future. As more banks follow suit, this could lead to increased activity in the housing market, particularly in urban and semi-urban areas.

Borrowers are advised to check their loan types (RLLR, MCLR, fixed) and speak with their lenders about the best ways to take advantage of the new rates.