PNB Cuts Home Loan Interest Rate to 8.10% After RBI Repo Rate Reduction
In a move that brings relief to homebuyers across the country, Punjab National Bank (PNB) cuts home loan interest rate to 8.10%, down from 8.35%. The revised rate is effective from December 6, 2025.
The decision comes a day after the Reserve Bank of India (RBI) announced a 25 basis point cut in the repo rate, bringing it down to 5.25%. This is the first major reduction announced by a public sector bank following the latest monetary policy update.
The reduction in home loan interest rates is expected to benefit lakhs of borrowers, especially those who have taken loans under the Repo-Linked Lending Rate (RLLR) system.
On December 5, the RBI’s Monetary Policy Committee reviewed the economic situation and decided to lower the repo rate. The move was widely expected due to the slowdown in consumer spending and the need to make borrowing more affordable.
The repo rate is the rate at which the RBI lends short-term funds to banks. When the repo rate decreases, banks can borrow more cheaply and often pass on this benefit to customers. This is exactly what PNB has done by reducing its repo-linked home loan rate.
Economists believe that this rate cut aims to boost the housing sector, encourage home buying, and support growth in related industries like construction, steel, and cement.
The new rate applies to:
- All new home loan applications starting December 6
- Existing customers with repo-linked loans, at their next interest reset date
- Balance transfer customers shifting their home loans to PNB
PNB has confirmed that the rate cut will not affect customers with MCLR-based or fixed-rate home loans, unless the bank revises those benchmarks at a later stage.
Will Your EMI Decrease?
The biggest question for borrowers is simple: Will my EMI come down?
If You Have a Repo-Linked Loan (RLLR/EBLR)
Yes — your EMI will come down. However, repo-linked loans are reset every three months or six months, depending on the bank’s policy. The new 8.10% rate will apply automatically at your next reset cycle.
For example:
- A borrower with a ₹50 lakh loan at 8.35% may see a noticeable EMI drop when the rate reduces to 8.10%.
- The long-term savings can be significant, especially for 20–30 year loan tenures.
If You Have an MCLR-Based Loan
Your EMI will not change immediately. MCLR rates depend on internal bank calculations. They are not directly linked to repo rate changes.
If You Have a Fixed-Rate Loan
Your EMI will remain the same unless you shift to a floating-rate plan. Borrowers paying higher rates may also explore balance transfer options to shift their loan to PNB or other banks offering lower repo-linked rates.
Impact on the Real Estate Market
The reduction in interest rates is expected to make home buying cheaper and more attractive. Real estate developers and analysts believe the timing is ideal, especially during a period when housing demand is already high in metro cities.
Key expected impacts include:
- Increase in home loan applications
- Rise in property bookings, especially ready-to-move homes
- Boost to housing projects that depend heavily on loan-driven buyers
- Stronger sales in affordable and mid-income housing segments
Lower interest rates also improve affordability for first-time homebuyers, helping them borrow more while keeping EMIs manageable.
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Other Banks Likely to Follow PNB
PNB is not the only bank reducing lending rates. After the RBI’s announcement, many public and private sector lenders have started reviewing their loan pricing.
Banks like HDFC Bank, Indian Bank, Bank of India, and others are expected to bring down their home loan rates in the coming days.
With competition rising, borrowers may see more attractive schemes, festive offers, and flexible repayment options.
What Borrowers Should Do Now
Here are a few smart steps borrowers can take:
1. Check Your Loan Type: Find out whether your loan is repo-linked, MCLR-linked, or fixed-rate.
2. Check Your Reset Date: The EMI change will reflect only at your next reset cycle.
3. Calculate Savings: A small drop in rate can reduce your total interest outgo by lakhs over a long tenure.
4. Consider Switching Loans: If another bank offers a significantly lower rate, a balance transfer might help you save more.
5. Avoid Extending Tenure Unnecessarily: Lower EMIs are good, but keeping a long tenure increases total interest. If possible, maintain your EMI to reduce tenure instead.
The latest interest rate reduction by PNB is a welcome step for millions of homebuyers. With the RBI signalling a more accommodative stance and banks beginning to pass on the benefit, the housing market may see strong momentum in the months ahead.
