RBI Repo Rate Cut Brings Relief for Home Loan Borrowers

The Reserve Bank of India announced on 5 December 2025 that the repo rate has been reduced by 25 basis points to 5.25 percent. The announcement was part of the bi-monthly monetary policy update. This change will directly impact floating rate home loans which are benchmarked against the repo rate.

India’s latest repo rate cut has brought cheer to home loan borrowers as lenders prepare to reduce interest rates linked to the central bank’s policy rate.

The Monetary Policy Committee’s decision is expected to lower EMIs for both existing and new borrowers, offering much needed financial relief at a time when households are facing higher living costs.

Estimated EMI Savings After the Repo Rate Cut

Economic Times reported on 8 December 2025 that a borrower with a ₹50 lakh loan may save around ₹775 per month after the reduction, depending on how quickly their bank resets the rate.
 

This saving can increase household liquidity and may encourage more home buyers to consider property purchases in the coming months.

Rate Cuts Announced by Key Banks After Repo Reduction

LiveMint reported on 6 December 2025 that major lenders including Punjab National Bank, Bank of India and Indian Bank have already reduced their repo-linked lending rates in response.

Read More – How RBI’s 2025 Credit Rules May Cut Your Home Loan Rate Sooner
 

These cuts indicate that EMIs are likely to reduce for millions of borrowers soon, with banks passing on the benefit in their next reset cycle.

How India Reached This Phase of Lower Rates

The December reduction is part of a broader series of cuts by the RBI in 2025. Economic Times noted that repo rates have been lowered by 125 basis points during the year to support growth and ease borrowing costs.

• Earlier rate reductions were seen in February, April and June as inflation remained moderate and global conditions slowed domestic momentum. 
• Lower rates are expected to stimulate borrowing activity, revive real estate sentiment and support financial stability.
• Home loan borrowers have been under pressure due to high interest rates since late 2023. Builders and lenders had been calling for policy support to revive housing demand. 

The December move is being seen as a timely intervention that aligns with the improving inflation outlook.

Also Read – EMIs To Drop Further After RBI Cuts Repo Rate

A sector analysis published by LoansJagat on 15 September 2024 highlighted that interest rate fluctuations significantly influence borrower behaviour, and even a small rate cut can help revive loan demand.

What Industry Voices Are Saying?

Bankers and market analysts have welcomed the rate reduction. They believe that the latest cut will reduce overall borrowing costs and lift real estate transactions. 

Many lenders have publicly stated that all floating rate customers will see revised EMIs in the next reset cycle. Economists also suggest that lower household borrowing costs will support broader economic recovery.

Conclusion 

The repo rate cut is set to make home loans more affordable for existing and new borrowers. With banks already reducing lending rates, borrowers may soon see meaningful reductions in EMI outflows.
 

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