Your PNB home loan EMIs are about to become cheaper
What's the story
State-owned Punjab National Bank (PNB) has announced a reduction in its Repo Linked Lending Rate (RLLR), following the Reserve Bank of India's (RBI) decision to cut the repo rate on December 5. The bank has lowered its RLLR from 8.35% to 8.10%, effective yesterday. This move is expected to make home loans cheaper for borrowers. However, PNB's Marginal Cost of Lending Rate (MCLR) and Base Rate remain unchanged after this revision.
Other banks
Indian Bank and Bank of India follow suit
Along with PNB, other state-owned lenders have also announced new home loan interest rates. Indian Bank has lowered its repo-linked benchmark lending rate to 7.95% from 8.2%, effective today. Meanwhile, Bank of India has also slashed its Repo-Based Lending Rate (RBLR) by 25 basis points to match PNB at 8.1%. The revised rate for Indian Bank will be applicable till the next review period.
Rate impact
RBI's repo rate cut impacts credit markets
The RBI's decision to cut the repo rate by 25 basis points to 5.25% is expected to have a swift impact on credit markets. Home loan rates are likely to fall to levels last seen during the pandemic, with several state-owned banks currently offering home loans at 7.35%. These rates could drop to around 7.1%, reducing monthly repayments by around ₹1,440 for a ₹1 crore loan over 15 years.
Economic outlook
RBI's stance and economic growth projections
RBI Governor Sanjay Malhotra said the Indian economy has shown remarkable resilience despite global challenges. He added that the inflation outlook has provided room for growth support. The central bank has projected a 7% GDP growth in Q3 and 6.5% in Q4, with an overall growth forecast of 6.7% for the next fiscal year. The economy grew by 8.2% in Q2 of this fiscal year after a 7.8% expansion in Apr-June quarter.