Mumbai: In a festive gift to home loan borrowers, the Reserve Bank of India (RBI) has slashed the repo rate by 25 basis points to 5.25%, marking the fourth cut in 2025 and bringing the total reduction to 125 basis points.
This move, announced by RBI Governor Sanjay Malhotra, promises significant relief for those with floating-rate home loans, as banks are expected to lower lending rates, directly impacting equated monthly instalments (EMIs).
For an Rs 50 lakh home loan over 20 years, the impact is notable. At an earlier interest rate of 8.5%, borrowers paid an EMI of Rs 43,391.
With the repo rate cut potentially reducing the interest to 8.25%, the EMI could drop to Rs 42,603, saving Rs 788 monthly or Rs 9,456 annually, according to calculations based on SBI’s loan calculator. Over the loan’s tenure, these reductions could translate to savings of approximately Rs 9 lakh in interest, with an option to shorten the tenure by 42 months for even greater savings of over Rs 18 lakh if EMIs remain unchanged.
Industry experts hail the decision as a boost for the real estate sector. “This cut enhances affordability, encouraging first-time buyers and stimulating demand,” said Adhil Shetty, CEO of BankBazaar.
The RBI’s move, coupled with robust GDP growth of 8.2% and retail inflation at a historic low of 0.25%, signals a pro-growth stance, fostering optimism among homebuyers.
As banks like SBI and PNB adjust rates to 7.75–8.35%, borrowers are urged to explore refinancing or tenure adjustments to maximise benefits. This development not only eases financial burdens but also fuels aspirations for homeownership across India.