Synopsis: The RBI has cut the repo rate by 25 basis points to 5.25%, offering relief to millions of home loan borrowers. Borrowers with repo-linked loans may see an immediate drop in EMIs, while MCLR/Base Rate users may experience slower adjustments.
RBI Cuts Repo Rate to 5.25%: What It Means for Your Home Loan EMI
Home loan borrowers have a reason to smile. The Reserve Bank of India (RBI) on Friday announced a 25 basis point reduction in the repo rate, bringing it down to 5.25%. The decision was taken after a three-day meeting of the Monetary Policy Committee (MPC).
RBI Governor Sanjay Malhotra announced that the MPC was unanimous in its decision.
“The MPC voted unanimously to reduce the policy repo rate by 25 basis points to 5.25% with immediate effect,” he said.
Will Your EMI Come Down?
For most borrowers, the answer is yes—but it depends on the type of loan:
- Repo-linked (EBLR) home loans: EMIs are likely to decrease soon because these loans directly track the repo rate.
- MCLR/Base Rate loans: Relief may be delayed since these older systems do not react instantly to repo-rate changes.
If your loan is still under the Base Rate or MCLR system, you may consider switching to a repo-linked loan for faster transmission of rate cuts.
Fourth Rate Cut This Year
This marks the fourth repo rate cut of the year. Earlier cuts were followed by pauses in August and October due to global uncertainties such as US tariff actions and volatile economic conditions.
For existing homeowners, this means:
- Lower interest burden
- Reduced EMIs
- Faster loan repayment for those who keep EMIs unchanged
Big Boost for Homebuyers & Real Estate
Real estate experts believe this is the right push at the right time.
“A 25 basis point rate cut at this stage will meaningfully support homebuyer sentiment and improve affordability across categories. With inflation stabilising and demand staying strong, this is a constructive signal for both buyers and developers.”
The real estate sector, which has been under pressure due to high input and material costs, is expected to gain renewed momentum as cheaper loans attract more buyers.
📌 Key Takeaway
The RBI’s rate cut to 5.25% brings immediate EMI relief for repo-linked borrowers and strengthens homebuyer sentiment. With inflation easing and demand strong, the move is expected to boost both borrowers and the real estate market.
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