RBI repo rate at 5.25%: Home loan EMIs to stay unchanged for borrowers

Home Loan EMI Rate Unchanged: With EMIs steady after the MPC's first 2026 decision, experts say borrowers should reassess loan terms instead of waiting for fresh rate cuts

In its first policy decision of 2026, the Reserve Bank of India’s Monetary Policy Committee on Friday kept the repo rate unchanged at 5.25 per cent. With borrowing costs holding steady, industry executives say this phase is better suited for borrowers to fine-tune their existing home loans rather than wait for further rate cuts. 

“A status-quo decision reinforces the central bank’s preference to monitor inflation trends, liquidity conditions and transmission before initiating the next phase of rate action. The cumulative easing already delivered has largely flowed through to retail lending, making home loan rates relatively competitive compared to recent years,” said Adhil Shetty, CEO, BankBazaar. 

He added that even with rates on pause, affordability conditions remain supportive due to stable spreads, lender competition and selective seasonal concessions. 

The decision comes days after finance minister Nirmala Sitharaman presented the Union Budget 2026–27. 

The announcement by RBI Governor Sanjay Malhotra follows a series of rate cuts last year. Since February, the MPC reduced the repo rate by a total of 100 basis points through three consecutive cuts, bringing it down from 6.5 per cent in February to 5.5 per cent in June. One basis point is one-hundredth of a percentage point.

RBI MPC: What the rate pause means for home loans

Anuj Puri, chairman of ANAROCK Group, said the unchanged policy rate means home loan EMIs will stay where they are for now. 

“Keeping the repo rate at 5.25 per cent means that home loan EMIs will not change either. This will keep buyers engaged but does nothing to lift demand further and does nothing to make housing more affordable. The upside is that current home loan borrowers will not experience any EMI shocks for now, and new borrowers can plan their housing purchases with the benefit of predictability,” said Puri. 

While demand for affordable and mid-segment homes remains firm, rising property prices continue to pressure affordability. Market participants say a rate cut could have drawn some fence-sitters back, especially in price-sensitive segments. 

Affordable housing continues to lag

Data from ANAROCK Research shows that affordable housing remained subdued through 2025 in both sales and new launches.

• Affordable homes accounted for around 18 per cent of total housing sales across cities in 2025
• In 2024, affordable housing formed about 20 per cent of the roughly 4.60 lakh units sold across the top seven cities
• The segment’s highest share was in 2019, when 38 per cent of the approximately 2.61 lakh units sold fell under affordable housing 

Puri said the Union Budget offered little relief to this segment. 

“Union Budget 2026–27 failed to deliver any notable relief to the affordable housing buyer segment, which is in dire need of proactive intervention by way of interest stimulants for both buyers and developers,” said Puri. “The segment needs focused, high-impact measures like tax breaks — for developers, so they shift focus from premium and luxury housing, and for buyers, to improve affordability.” 

What borrowers can do during a pause

Shetty said borrowers should use this period to reassess their loan structure rather than wait for future policy action. 

• Check whether the loan is linked to an external benchmark such as the repo rate, which allows quicker transmission when rates change
• Review the spread charged by the lender and negotiate if the credit profile has improved
• Revisit EMI and tenure combinations, especially with stable rates and clearer income visibility after the Budget
• Use surplus cash for part-prepayments, even in small amounts, to reduce long-term interest outgo and shorten the loan tenure

“Using surplus cash for part-prepayments, even in small amounts, can materially reduce interest costs over the long term and bring forward loan closure,” said Shetty.