RBI cuts repo rate by 25 bps: EMIs to come down? How home loan buyers could benefit from it

After the Reserve Bank of India (RBI), under the leadership of Governor Sanjay Malhotra, announced a 25 basis point drop in the repo rate, bringing it down to 6%, home loan interest rates are anticipated to further fall. With interest rates perhaps falling below 8% annually, this action, which is a component of the first monetary policy for the fiscal year 2025–2026, is probably going to help borrowers.

It would be important to watch how big lenders react to the RBI's recent decision because banks have previously expressed reluctance to fully pass on the advantages of repo rate decreases to retail borrowers. Home loan borrowers who have been hit hard by high interest rates in recent years may receive significant relief if they lower their rates by about 50 basis points after the RBI's 25 basis point drop.

Moneycontrol has previously received confirmation from HDFC Bank and Axis Bank that they had transferred the entire 25-bps bonus to their current clients. Banks must evaluate interest rates at least once every quarter in accordance with RBI guidelines, while the exact timing of rate increases may differ based on the terms of the loan. Lower rates might soon be advantageous for new borrowers as well.