Home Loan EMI to Drop After RBI’s Repo Rate Cut

EMI for home loans is set to fall by over Rs. 1,500/month, as the Reserve Bank of India stepped forward with its latest move. The RBI cut its repo rate by 50 basis points (from 6% to 5.5%), other banks across the nation are expected to lower interest rates on loans.

For instance, if a home loan amounts to Rs. 50 lakh over 20 years, a monthly savings of Rs. 1,569 can be made, resulting in nearly an annual saving of Rs. 19,000, bringing a wave of relief amongst borrowers amid high costs.

A reduction in the repo rate reduces interest rates, as it is the rate at which the RBI lends money to commercial banks, making it possible for commercial banks to provide loans at lower interest rates.

This system affects borrowers directly, especially the ones with home loans linked to repo-based lending rates (RBLR).

FD Rates to be reduced

According to the Research report by SBI, “FD rates have been reduced in the range of 30-70 bps since February 2025.” The report also states that the banks have also reduced interest rates on savings accounts to a floor rate of 2.70%.

Although, investors who already hold an FD do not need to worry about these changes, as these reduced interest rates will only apply to new FD and not the existing ones.