Homebuyers have received a welcome relief as LIC Housing Finance has reduced interest rates on new home loans to 7.15%, effective from December 22, 2025. This strategic move follows the Reserve Bank of India’s (RBI) recent repo rate cut, making home ownership more affordable for those with strong credit profiles as we head into 2026.
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RBI Repo Rate Cut: A 1.25% Drop in 2025
The Monetary Policy Committee (MPC) of the Reserve Bank of India recently reduced the repo rate by 25 basis points, bringing the final rate for 2025 down to 5.25%. Throughout the year, the RBI has implemented a cumulative cut of 1.25%, a aggressive shift aimed at boosting economic growth. Consequently, housing finance companies and major banks are now passing these benefits directly to consumers through lower EMIs.
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Interest Rates Tied to CIBIL Score
Under the new pricing structure, your CIBIL score is the primary factor in determining your interest rate. Borrowers with a “super-prime” score now access the lowest rates in years.
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| CIBIL Score Range | LIC HFL Interest Rate (2025) | Loan Amount Slab |
| 825 or Above | 7.15% | Up to ₹5 Crore |
| 800 – 824 | 7.25% | Up to ₹5 Crore |
| 750 – 774 | 7.45% | Up to ₹50 Lakh |
| 700 – 724 | 7.95% to 8.25% | Based on Loan Amount |
| Below 600 | 9.55% to 10.00% | High-risk category |
LIC vs SBI: Which is Better for You?
While LIC Housing Finance has stolen the spotlight with its 7.15% entry rate, the State Bank of India (SBI) remains a formidable competitor with its own rate revisions.
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LIC Housing Finance: Starts at 7.15%. This is ideal for borrowers seeking a straightforward, low-cost home loan with a high credit score.
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SBI Home Loans: Standard rates start at 7.25% (effective Dec 15, 2025). However, SBI offers more versatile products like Maxgain (overdraft) and top-up loans, which might be preferable for those needing financial flexibility.
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Conclusion and Disclaimer
The aggressive rate cuts of 2025 have created a “Goldilocks” environment for first-time homebuyers. If you have been maintaining a high CIBIL score, now is likely the most cost-effective time to lock in a home loan before the market stabilizes in early 2026…
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Disclaimer: Loan interest rates are subject to change based on RBI policy and lender discretion. Final rates depend on individual eligibility, property location, and detailed credit assessment. Please read all loan-related documents carefully before signing.
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