Home Loan Rates After Repo Pause: Should You Switch?

With a repo rate held at 5.25%, home-loan EMIs are steady for now. Borrowers are weighing fixed-rate comfort against floating-rate pricing and quicker transmission.

In the February policy, the repo rate stayed unchanged at 5.25%, extending the pause after earlier cuts. A Moneycontrol report dated February 16, 2026 said home-loan rates have entered a steadier phase, prompting borrowers to check if shifting from floating to fixed is worth it. 

Another Moneycontrol report dated February 06, 2026 (10:45 IST) flagged that EMIs on floating-rate loans are unlikely to rise immediately after the pause and added a key number: borrowers have saved over ₹9.29 lakh in interest from past cuts, based on its calculations and examples. 

The Switch Decision Is Now About Benchmark, Fees, And Risk Appetite

The most useful lens is not “fixed vs floating”. It is repo-linked vs MCLR-linked, and how fast a bank passes on policy changes. The Economic Times (February 02, 2026) cited data showing 60.6% of outstanding floating-rate loans were repo-linked (as of December 2024), while 35.9% were MCLR-linked. 

Moneycontrol’s February 16, 2026 piece explained the trade-off clearly: floating rates can be cheaper over long tenures, while fixed rates offer EMI predictability but can cost more and may come with prepayment-related terms. 

Before deciding, borrowers are now checking three practical points: (1) how often the loan resets, (2) whether the lender’s spread can change, and (3) the conversion or refinancing charge.
 

Borrowers stuck on older benchmarks may gain more by switching benchmark type than by locking fixed rates at a higher level.

Why Transmission And Portfolio Mix Became The Big Story?

The current pause follows a deep easing phase in 2025. Reuters on June 06, 2025 reported a 50 bps cut that took the repo rate to 5.50%, and said cuts since February Economic Times, June 20, 2025 totalled 100 bps at that point. Reuters also reported a 100 bps CRR cut to 3%.

Banks responded with rate changes. Economic Times (June 20, 2025) reported that lenders like PNB, Bank of Baroda, Indian Bank, and Bank of India reduced home-loan rates after the June policy move.

By late 2025, borrower preference split became visible in bank books. Times of India (October 30, 2025) reported that at Indian Bank, repo-linked share rose 40% to 45% between April 2025 and September 2025, while MCLR-linked fell 52% to 48%. For Indian Overseas Bank, repo-linked fell 60% to 46%, while MCLR-linked rose 40% to 49%.
 

After the table, the pause story becomes clearer: with the policy rate steady, lenders are being watched on pass-through and spread behaviour, not just on headline rates.

What Executives And Experts Are Signalling?

In the benchmark shift, Binod Kumar, MD and CEO of Indian Bank, told TOI that more customers are requesting repo-linked loans and several existing borrowers are seeking to shift from MCLR to RLLR. 

Ajay Kumar Srivastava, MD and CEO of IOB, said MCLR moves happen with a lag, giving time to adjust, and projected MCLR-linked credit share could rise further by FY26-end.

From the market side, Manju Yagnik (NAREDCO Maharashtra) was quoted by Moneycontrol saying the unchanged rate keeps floating EMIs steady and brings predictability. 

Conclusion

With repo at 5.25%, the immediate EMI shock is off the table. The sharper call is to compare benchmark type, reset terms, and switching costs before locking into fixed rates.