RBI slashes repo rate by 25 bps, bringing it down to 6% in 2025. Learn how this impacts your home loan EMI, savings, and refinancing opportunities.
Good news is pouring in for home loan borrowers in 2025! The Reserve Bank of India (RBI) has just announced another 25 basis point cut in the repo rate, making it the second such move this year. This brings the repo rate down to 6%, signaling a potential drop in EMIs for millions of floating-rate home loan borrowers.
What Is the Repo Rate?
The repo rate is the interest rate at which the RBI lends money to banks. When the repo rate is reduced, banks can borrow funds at a lower cost—and ideally, they pass that benefit to customers through lower interest rates on loans.
How Will It Impact My Home Loan EMI?
If you’re already repaying a home loan, or planning to take one soon, this is what you can expect:
EMI Impact Example
| Loan Amount | Interest Rate | Tenure | Monthly EMI (Before) | Monthly EMI (After 50 bps Cut) | Savings/Month | Savings/Year |
| ₹50 Lakhs | 9% | 20 yrs | ₹44,986 | ₹43,391 | ₹1,595 | ₹19,140 |
What Does This Mean for You?
- Lower EMIs Ahead: Lenders are expected to start passing on the benefits of this rate cut soon. If you’ve got a floating-rate loan, your EMIs could reduce significantly in the coming months.
- Big Savings Example:
If you’ve taken a ₹50 lakh home loan at 9% for 20 years, your EMI currently stands at ₹44,986.
If banks pass on a 50 bps cut, your new EMI could drop to ₹43,391.
That’s a saving of ₹1,595/month, ₹19,140/year, and a whopping ₹3.8 lakh over the loan tenure!
How Are Banks Reacting to the Repo Rate Cut?
Banks have often been hesitant in the past to immediately reflect RBI rate cuts in their lending rates, but the response in 2025 appears to be more optimistic. Major players like HDFC Bank and Axis Bank have already passed on the full 25 basis point (bps) reduction to their existing home loan customers. This indicates a positive trend in the lending landscape, suggesting that more banks may follow suit in the coming weeks. As per RBI regulations, all banks are required to review and potentially revise their interest rates at least once every quarter, so borrowers can expect broader implementation of this rate cut across the board.
For borrowers, especially those with floating-rate loans linked to the RBI’s repo rate, this is welcome news. The new repo rate has been reduced from 6.25% to 6%, which is expected to bring down EMIs for many. Loans linked to external benchmarks—mandatory since October 2019—are designed to respond more quickly to such monetary changes. This means customers with repo-linked loans will likely see faster and more noticeable drops in their EMIs. If you’re currently paying a home loan interest rate above 8.5%, this could be a great time to explore refinancing options and lock in a better deal.
What’s the Current Interest Rate Scenario?
If you’re planning to take a home loan now, this is the perfect time. With repo rates at 6%, interest rates on new home loan interest may drop, especially if you have a credit score of 800+.
Current lowest home loan rates (expected):
👉 8.10% to 8.35%
👉 Even lower for refinance and top-rated borrowers
Should You Refinance?
You should consider refinancing if:
- Your current loan is 50 bps or more above the latest offers.
- Your loan isn’t linked to the repo rate.
- Your credit score is good and you’re eligible for better rates.
Final Thoughts
This repo rate cut is great news for existing borrowers and a big opportunity for new buyers. Lower EMIs, better home loan deals, and higher affordability are all now within reach.
Whether you’re buying your first home or planning to refinance, this is the time to act.