RBI policy: Home loan borrowers can save Rs 9 lakh on a Rs 50 lakh loan

RBI rate cut: A fourth rate cut in 2025 has brought the repo rate to 5.25 percent, giving homebuyers room to save through lower EMIs, shorter tenures, and better lending rates

In good news for home loan borrowers, the Reserve Bank of India reduced the repo rate by 25 basis points on Thursday, bringing it down from 5.5% to 5.25%. The latest cut brings total reductions in 2025 to 125 basis points. The change has given homebuyers fresh hope of lower EMIs as banks start adjusting their lending rates.

 

“With a 25 basis point cut, policy is now more clearly aligned towards supporting growth. Home loan borrowers will see modest but meaningful relief as lending rates adjust,” said Adhil Shetty, CEO, BankBazaar.

 

How do borrowers stand to gain?

 

Shetty said the cumulative 125 basis point reduction this year has already eased EMIs, and for a Rs 50 lakh loan over 20 years the lower rates can reduce lifetime interest outgo by about Rs 9 lakh.

 

 

How much are people gaining?

  — For a Rs 50 lakh home loan over 20 years, the 125 basis point cumulative cut in 2025 works out to:

  — About Rs 800–Rs 1,000 lower EMI per month after the rate reductions already passed on.

 

— Around Rs 9 lakh reduction in total lifetime interest, as mentioned by Adhil Shetty.

 

If a borrower keeps the EMI unchanged and shortens the tenure, savings can rise to Rs 10 lakh or more over the full loan period, depending on the original rate. 

 

What home loan borrowers must do now?

 

“Home loan borrowers should act immediately, as banks like SBI and PNB have already lowered rates to 7.75%-8.35% for floating loans. This rate reduction increases borrowers’ purchasing rate by lowering EMIs and encourages real estate demand, directly benefiting developers through cheaper financing and faster sales,” said Rajat Bokolia, CEO, Newstone.

 

Existing borrowers can also find more room to save. “Existing borrowers can enhance savings by holding EMIs steady and shortening tenure, which helps bring long-term liabilities under better control,” said Shetty. 

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Market response and affordability trends

 

“However, the real impact hinges on the effective transmission of these benefits. If banks swiftly pass on this rate cut to borrowers, we anticipate a renewed surge in sales velocity carrying firmly into Q1 2026,” said Anuj Puri, Chairman, ANAROCK Group.

 

Housing prices have continued to rise across major cities. ANAROCK Research noted that average prices across the top seven cities rose by around 10% in 2025. Puri said the latest move gives buyers some breathing space. “This can encourage aspiring homebuyers who had paused their decisions due to price hikes to finally take the plunge. The rate cut is a distinct sentiment multiplier for year-end sales,” he said.

 

Best home loan interest rates across banks and housing finance companies (Dec 2025), as provided by Paisabazaar:

 

Public sector banks

 

State Bank of India

Up to Rs 30 lakh: 7.50% – 8.95%

Rs 30–75 lakh: 7.50% – 8.95%

Above Rs 75 lakh: 7.50% – 8.95%

 

Punjab National Bank

Up to Rs 30 lakh: 7.50% – 9.35%

Rs 30–75 lakh: 7.45% – 9.25%

Above Rs 75 lakh: 7.45% – 9.25%

 

Bank of Maharashtra

Up to Rs 30 lakh: 7.35% – 10.15%

Rs 30–75 lakh: 7.35% – 10.15%

Above Rs 75 lakh: 7.35% – 10.15%

 

Indian Overseas Bank

Up to Rs 30 lakh: 7.35% onwards

Rs 30–75 lakh: 7.35% onwards

Above Rs 75 lakh: 7.35% onwards

 

Indian Bank

Up to Rs 30 lakh: 7.40% – 9.40%

Rs 30–75 lakh: 7.40% – 9.40%

Above Rs 75 lakh: 7.40% – 9.40%

 

Private sector banks

 

Kotak Mahindra Bank

Up to Rs 30 lakh: 7.70% onwards

Rs 30–75 lakh: 7.70% onwards

Above Rs 75 lakh: 7.70% onwards

 

ICICI Bank

Up to Rs 30 lakh: 7.65% onwards

Rs 30–75 lakh: 7.65% onwards

Above Rs 75 lakh: 7.65% onwards

 

HSBC Bank

Up to Rs 30 lakh: 7.70% onwards

Rs 30–75 lakh: 7.70% onwards

Above Rs 75 lakh: 7.70% onwards

 

South Indian Bank

Up to Rs 30 lakh: 7.80% onwards

Rs 30–75 lakh: 7.80% onwards

Above Rs 75 lakh: 7.80% onwards

 

Karnataka Bank

Up to Rs 30 lakh: 7.30% – 11.68%

Rs 30–75 lakh: 7.30% – 11.68%

Above Rs 75 lakh: 7.30% – 11.68%

 

HDFC Bank

Up to Rs 30 lakh: 7.90% onwards

Rs 30–75 lakh: 7.90% onwards

Above Rs 75 lakh: 7.90% onwards

 

Housing finance companies (HFCs)

 

LIC Housing Finance

Up to Rs 30 lakh: 7.50% onwards

Rs 30–75 lakh: 7.50% onwards

Above Rs 75 lakh: 7.50% onwards

 

Tata Capital

Up to Rs 30 lakh: 7.75% onwards

Rs 30–75 lakh: 7.75% onwards

Above Rs 75 lakh: 7.75% onwards

 

Aditya Birla Capital

Up to Rs 30 lakh: 7.75% onwards

Rs 30–75 lakh: 7.75% onwards

Above Rs 75 lakh: 7.75% onwards

 

ICICI Home Finance

Up to Rs 30 lakh: 7.50% onwards

Rs 30–75 lakh: 7.50% onwards

Above Rs 75 lakh: 7.50% onwards

 

Godrej Housing Finance

Up to Rs 30 lakh: 7.75% onwards

Rs 30–75 lakh: 7.75% onwards

Above Rs 75 lakh: 7.75% onwards