Home Loan EMIs to Drop by Over ₹1,500 as RBI Slashes Repo Rate to 5.5%

Borrowers of long-term home loans can expect significant monthly and yearly savings; real estate sector hails move as a boost to affordability and demand

New Delhi | June 7, 2025: Home loan borrowers have reason to rejoice. Following the Reserve Bank of India’s (RBI) decision to cut the repo rate by 50 basis points—from 6% to 5.5%, home loan EMIs are expected to drop significantly.

Also Read: RBI Slashes Repo Rate by 50 bps to 5.5%: EMIs Set to Drop, Real Estate Gets a Boost

For instance, a borrower with a ₹50 lakh home loan over 20 years at an interest rate of 8.5% currently pays an EMI of around ₹43,391. With a 50-basis-point drop in interest, the revised rate becomes 8%, reducing the EMI to approximately ₹41,822. This translates to a monthly saving of ₹1,569, or about ₹18,828 annually.

The repo rate is the rate at which the RBI lends money to commercial banks, and a reduction in this rate enables banks to offer loans to consumers at lower interest rates. Most modern home loans are linked to the Repo-Based Lending Rate (RBLR), making them directly sensitive to such policy rate changes.

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Real Estate Sector Welcomes Move

Gaurav Gupta, Secretary of CREDAI, said the move is likely to enhance housing affordability, especially in the mid-income segments. “It also improves sentiment across the real estate ecosystem, benefiting industries such as cement, steel, furnishings, and more,” he noted.

Besides home loans, other types of retail credit — personal loans, auto loans, and education loans — are also likely to see reduced interest rates and lower EMIs.

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The RBI’s decision comes in response to softening inflation, which has now dipped below the central bank’s upper comfort limit, giving it room to stimulate growth through monetary easing.

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RBI repo rate cut, Home loan EMI, RBI monetary policy, housing affordability, real estate news, loan interest rates, Gaurav Gupta CREDAI, personal loans, auto loans, RBI rate hike