RBI rate cut: EMIs may fall to Rs 68,000-70,000 for Rs 1 crore home loan

RBI cuts repo rate by 50 bps to 5.5%, making home loans cheaper. Borrowers with repo-linked loans to see quicker EMI relief; others may consider switching

Good news for home loan borrowers! The Reserve Bank of India (RBI) has cut the repo rate by 50 basis points to 5.5 per cent on Friday. This is the third consecutive cut by the Monetary Policy Committee (MPC) this year.

 

With this move, borrowers with floating-rate home loans—especially those linked to the repo rate—can expect lower EMIs in the coming months.

 

“Home loan borrowers can expect a more favourable lending environment going forward,” said Adhil Shetty, CEO of Bankbazaar.com. “The cumulative rate cut of 100 basis points in 2025 has brought the key policy rate down to 5.50 per cent, prompting banks to reduce their repo-linked lending rates as well as their MCLR.”

 

 

MPC rate cut impact on home loans: Here's the math

 

Let’s say you took a home loan of ₹1 crore at 8.25 per cent. According to Ankit Shah, COO and CMO at Grahm Realty, the rates for creditworthy borrowers could now begin at approximately 7.5 per cent.

 

This shift means a notable drop in monthly EMIs.

 

“For instance, on a home loan of ₹1 crore, EMIs may now fall in the range of ₹68,000 to ₹70,000, making homeownership far more accessible,” said Shah.

 

“For aspiring homebuyers, especially first-time buyers, this is a golden window to act. Lower EMIs translate into improved affordability and long-term savings,” he added.   

 

CRR cut to improve liquidity

 

The RBI also reduced the Cash Reserve Ratio (CRR), which could free up funds for banks to lend more actively.

 

“The reduction in the CRR will help boost liquidity in the banking system. Developers will be able to access more capital for their projects, and this can positively impact project completion timelines,” said Anuj Puri, chairman, ANAROCK Group. “It also gives banks the option to reduce home loan interest rates, which will again positively impact sentiment in the affordable and mid-income segments.”

 

What it means for borrowers

 

* Lower repo rate can reduce EMIs for those with repo-linked home loans

* Borrowers paying over 50 basis points above market rate may benefit from refinancing

* Those with older floating rate loans linked to MCLR or base rate may not see immediate benefits

* Only repo-linked loans pass on rate changes quickly and in full

 

“This will directly benefit borrowers with floating-rate home loans, as they are likely to see a reduction in their EMIs,” said Shetty. “New borrowers may find that loan offers have become more attractive, especially as competition intensifies among lenders. Borrowers with strong credit scores are in a particularly good position to negotiate better rates.”

 

Affordability boost for first-time buyers

 

The rate cut is expected to improve affordability, especially in the mid-income and premium housing segments.

 

“This will help revive interest in first-time purchases and the mid-income segment,” said Manju Yagnik, vice chairperson of Nahar Group and senior vice president of NAREDCO Maharashtra.

 

Amit Prakash Singh, chief business officer at Urban Money and co-founder of Square Yards, said, “The RBI’s decision marks a proactive step toward stimulating economic growth. This reduction is expected to ease borrowing costs significantly, reduce EMIs, and increase disposable income — all of which are likely to support domestic consumption and drive demand across sectors.”

 

Harish Fabiani, chairman of IndiaLand Properties, said, “Existing borrowers on floating-rate loans can expect a drop in their monthly payments, while new borrowers will find loans more affordable. Those on MCLR or base rate should consider switching to repo-linked loans to benefit faster from this cut.”

 

Not all borrowers benefit equally

 

Despite the push for repo-linking, not all borrowers are on the same system.

 

“Only 50 per cent of floating rate loans with public sector banks are on repo-based pricing. Around 2 per cent are still on base rate,” said Shetty. “Borrowers should check their loan type and consider shifting to a repo-linked home loan if they can save on interest.”

 

What borrowers can do now

 

1. Check whether your loan is repo-linked or MCLR/base rate

2. Consider switching to a repo-linked loan if you’re paying more

3. Compare rates across lenders, especially if you have a strong credit score

4. Think about part-prepaying your loan to reduce interest burden

5. Maintain a healthy credit score to access better offers

 

“Those on MCLR or base rate loans might consider switching to repo-linked products for quicker savings,” said Shetty. “Borrowers should also evaluate the option of part-prepaying their loans, as doing so during a low-rate environment can significantly reduce the overall interest burden and loan tenure.”