Breaking News: Big Relief for Home Buyers - RBI Cuts Repo Rate

The Reserve Bank of India has recently provided big relief to Home Buyers by making a significant move and cutting the repo rate in its latest policy review. The repo rate, which directly influences lending rates, has dropped to 5.5%, the lowest in 3 years, offering a great opportunity for home loan borrowers. This was announced by the Reserve Bank of India (RBI) on June 6, 2025. If you have a floating-rate home loan, you could benefit from lower monthly EMIs. The RBI announced a 50-basis-point (bps) reduction in the repo rate. This marks the third consecutive rate cut of the year. For the home loan customers, it means that banks adjust their interest rate downwards. Potentially, it will result in lower EMI.

Here’s how a minor fall in the repo rate benefits you and your lending experience.

What is a Repo rate?

Repo rate is the rate at which money is lent to commercial banks by the Reserve Bank of India. When the repo rate falls, banks usually extend this advantage to borrowers, meaning customers, in the form of lower interest rates on loans such as home loans.

If your home loan is tied to a floating rate of interest, any decline in the repo rate will directly affect your EMI and make it lower, helping you save a good sum of money in the long run.

How Does This Repo Rate Cut Affect Existing Home Loan Borrowers?

Floating Interest Rate Home Loans: If your home loan is based on a floating rate, the interest rate will decrease due to the repo rate cut, resulting in lower EMI.

Fixed-Rate Home Loans: If you have a fixed-rate home loan, your current EMI will not change with the repo rate cut.

However, if you refinance your existing loan with a floating interest rate loan, you can receive the repo rate cut benefits.

What is the difference between Fixed Repo Rate & Variable Repo Rate 

Parameter	Fixed Repo Rate	Variable Repo Rate
Interest Rates	Remains constant throughout the loan tenure.	Varies with changes in market conditions, including the repo rate.
Risk Assessment	No risks as rates are locked in.	Subject to market fluctuations and changes in the repo rate.
Nature of EMI	Fixed EMIs throughout the loan term.	EMIs can fluctuate based on repo rate changes.
Overall Cost	Unaffected by market rate changes, leading to predictable payments.	Potential for savings if the repo rate decreases, but also risk of higher payments if it increases.

How can you Maximize Savings on your Home Loans?

Reach Out to Your Lender: Call your bank or lender to see if they are passing on the benefit of reduced rates following a cut in the repo rate. Your lender may pass the reduction on to you as a lower EMI.

Refinance Your Loan: You can also refinance your home loan with a lender who offers you better terms or a lower interest rate. Also, do not forget to read and compare all costs before making a decision.

Think About Prepaying Your Loan: When rates are low, you can make a prepayment on your loan, which will bring down your principal and will also lower your overall interest costs over time.

Conclusion

For home loan borrowers, the RBI's recent repo rate cut provides a golden opportunity to save up money. A floating-rate home loan means the future EMI will be reduced if you have a home loan.

Pro Tip: Make sure to read your loan agreement and ask your lender how the recent changes can reduce your home loan EMI. This may be the ideal time to review your home loan and see how the changes can help you save money.