The new year has begun, and if you’re thinking of buying a house or taking out a home loan, the first thing that comes to mind is the interest rate. At the beginning of 2026, rates have become quite low, as the RBI significantly cut the repo rate in 2025.
Now, in January 2026, home loan interest rates are starting from 7.10%. Some banks are even offering rates between 7.10% to 7.90%. Let’s understand in simple terms which bank is offering what rate and what the benefits are.
What’s the Current Rate Scenario?
The RBI’s repo rate is now at 5.25%, which came after the cuts in 2025. Because of this, banks have significantly reduced their home loan interest rates.
Public sector banks like Bank of India, Bank of Maharashtra, and Central Bank are offering the lowest rates starting from 7.10%. Private banks like HDFC, ICICI, and Axis are slightly higher, but still between 7.65% to 8.35%.
These rates are floating, meaning if the RBI makes further cuts, your EMI could decrease even more. Fixed rates are slightly higher, but people choose them for stability.
Top Banks’ Rates (January 2026)
| Bank Name | Starting Rate (p.a.) |
|---|---|
| Bank of India / Bank of Maharashtra / Central Bank | 7.10% |
| Union Bank of India | 7.45% |
| SBI | 7.50% |
| ICICI Bank | 7.65% |
| HDFC Bank | 7.90% |
| Axis Bank | 8.35% |
These rates depend on your credit score, loan amount, and profile. A good CIBIL score (750+) will get you the lowest rate. Women borrowers get an extra discount at some banks.
Why Are the Rates So Low?
In 2025, the RBI reduced the repo rate by 1.25% (125 basis points), which directly impacts home loans. Now, in 2026, if the economy remains stable, the rates are likely to stay around the same level or may even decrease slightly. This benefit is quickly reflected in floating rate loans.
Pros and Cons of Low Rates
Pros:
- Lower EMIs mean you can borrow a larger loan amount.
- Choosing a longer tenure reduces the monthly burden.
- No penalty on prepayment in floating rate loans.
- Buying a home has become more affordable.
Cons:
- Rates can increase if inflation rises.
- Processing fees and other charges are applied separately.
- If you choose a fixed rate, you won’t benefit from the rate cut.
- Higher loan amounts require more extensive documentation checks.
Conclusion
Taking a home loan in 2026 is an excellent time, as rates start from 7.10% and the EMIs are quite manageable. If you have a good credit score and your documents are ready, apply now.
Public sector banks are offering the lowest rates, while private banks provide faster service. Check the best deal for yourself and fulfill your dream of owning a home soon.
