New Delhi, December 27, 2025 – In a major boost for aspiring homeowners, LIC Housing Finance Ltd (LIC HFL) has announced a significant reduction in its home loan interest rates, bringing the starting rate down to 7.15% per annum. This makes it one of the most competitive offers in the market, undercutting even the State Bank of India’s (SBI) entry-level rate of 7.25%.
The revised rates, effective from December 22, 2025, apply to new home loan sanctions and come in the wake of the Reserve Bank of India’s (RBI) recent 25 basis points (bps) repo rate cut – part of a cumulative 125 bps reduction throughout 2025. The move is aimed at revitalizing homebuyer sentiment amid cautious market conditions and making home ownership more affordable, especially for first-time buyers.
Key Details of the Rate Cut
- Starting Interest Rate: 7.15% p.a. for borrowers with a CIBIL score of 825 or above.
- Loan Amount Eligibility for Lowest Rate: Up to ₹5 crore.
- Applicability: Only for fresh (new) home loans sanctioned on or after December 22, 2025. Existing borrowers remain on their contracted rates unless they opt for a balance transfer or restructuring.
- Rate Structure: Fully credit-score linked, rewarding high-credit-profile customers. Lower scores will attract higher rates (e.g., 7.95%–8.25% for scores in the 700–724 range, based on loan size).
LIC HFL’s Managing Director and CEO, Tribhuwan Adhikari, stated: “This year, the RBI’s total 125 bps repo rate cuts have provided relief to homebuyers. Heading into 2026, we are optimistic that this initiative will instill confidence among first-time purchasers and set a positive tone for housing demand.”
Comparison with Other Lenders
LIC HFL’s new offering positions it ahead of major competitors:
- State Bank of India (SBI): Starts at 7.25% (effective December 15, 2025), going up to 8.45% based on profile.
- Union Bank of India: Recently reduced to 7.15%, matching LIC HFL.
- Other public and private banks have also passed on partial benefits from the RBI cuts, but LIC HFL’s rate is particularly attractive for high-CIBIL borrowers seeking straightforward loans.
While SBI offers additional products like overdraft-linked Maxgain or top-up facilities, LIC HFL appeals to those prioritizing the lowest possible interest outgo.
Impact on Borrowers
This reduction translates to substantial savings on Equated Monthly Installments (EMIs). For instance:
- On a ₹50 lakh loan for 20 years:
- At 7.25% (SBI’s rate): Monthly EMI ≈ ₹39,500
- At 7.15%: Monthly EMI ≈ ₹39,200 (savings of ~₹300 per month, or over ₹70,000 over the tenure).
Balance transfer options are available for existing borrowers from other lenders, allowing them to switch to LIC HFL’s lower rates, subject to eligibility.
Why This Matters
The housing finance sector has seen multiple rate adjustments in 2025 following RBI’s accommodative stance to support economic growth. With property prices stabilizing in many cities and inventory levels high, lower borrowing costs could spur demand, particularly in the affordable and mid-segment categories.
Experts believe this competitive pricing may prompt further cuts from peers, intensifying rivalry in the home loan market. However, overall demand will also depend on factors like job stability, income growth, and real estate trends.
How to Apply and Check Eligibility
- Visit the official LIC HFL website (lichousing.com) or nearest branch.
- Use online tools like EMI calculators, eligibility checkers, and balance transfer calculators.
- Required documents typically include identity proof, income statements, property papers, and CIBIL report.
Homebuyers are advised to compare offers, check their CIBIL score (aim for 825+ for the best rate), and act quickly as rates are subject to market changes.
This rate cut reinforces LIC HFL’s position as a trusted player in India’s housing finance landscape, backed by the credibility of Life Insurance Corporation of India. As 2025 draws to a close, it’s timely relief for millions dreaming of their own home.
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