Mumbai, Oct. 20: Home loan borrowers will have to wait a little longer for an interest rate cut.

Hopes of a rate revision were raised today by the RBI which unexpectedly lowered a benchmark interest rate — the repo — by one percentage point to 8 per cent.

The repo is the rate at which banks access overnight loans from the RBI against government securities.

The repo rate cut was seen as a strong signal to banks to trim their own lending rates.

Bankers said they did not plan to take any immediate cues from the RBI decision. However, some banks have cut their home loan rates as part of festive season offers.

Senior officials from both public and private sector banks said any cut in interest rates would come only after deposit rates were brought down.

“We may see banks bringing down deposit rates by quarter to half a percentage point by the end of this month or early next month. Towards the end of this calendar year, there could be some relief to home loan and other borrowers,” said a senior official with a private sector bank.

Banks had offered attractive interest rates on deposits to mobilise funds when the system was passing through a liquidity crunch.

“The balance sheets of banks will be affected if they reduce lending rates without cutting deposit rates,” the banker added.

“Banks do not get deposits easily these days. Several banks are offering an interest rate of more than 10 per cent to attract deposits. Unless deposit rates come down, lending rates are unlikely to decline,” said K.K. Agarwal, the executive director of Allahabad Bank.

Rupa Rege Nitsure, chief economist at Bank of Baroda, said even if banks offered more than 10 per cent on deposits, the effective cost of raising funds was higher as a part of this money had to be set aside as reserves with the RBI.

The Union Bank of India today reduced interest rate on home loans by 25 basis points. Mangalore-based Corporation Bank also announced a 0.25 percentage point reduction in interest rates on home and vehicle loans from October 17 to November 15 on all fresh loans taken during the period.

Punjab National Bank reduced the floating rate on housing and educational loans for existing as well as prospective borrowers by half a percentage point. The bank also reduced the rate of fixed rate housing loans and car loans for the prospective borrowers by the same margin.

K.V.S. Manian, the head of retail liabilities at Kotak Mahindra Bank, said the bank could “act in the couple of days”, hinting that it might bring down deposit rates.