The Reserve Bank of India (RBI) on Friday reduced the key benchmark repo rate by 25 basis points to 5.25 per cent, the first rate cut in six months. The central bank also retained a neutral stance, leaving room for potential further cuts.

This move is aimed at supporting India’s “goldilocks” economy amid high US tariffs and global uncertainty.

So, how does this impact your loans and EMIs?

Home Loans Get Relief

According to Adhil Shetty, CEO & Co-Founder of BankBazaar, the cumulative 125-basis-point rate reduction this year has already eased EMIs for borrowers.

“For a Rs 50 lakh home loan over 20 years, the fall in rates can reduce lifetime interest outgo by about Rs 9 lakh,” he said.

For a Rs 50 lakh home loan over a 20-year tenure, the cumulative effect of the repo rate cut can reduce your EMI by roughly Rs 3,750 per month, translating to about Rs 45,000 annually and potentially Rs 9 lakh over the entire loan period if rates remain low.

Shetty added that existing borrowers can either hold EMIs steady and shorten their loan tenure or refinance if their lenders do not pass on the rate cut within one to three billing cycles.

Ashish Narain Agarwal, Founder & MD of PropertyPistol, highlighted the benefit for new homebuyers, especially in expensive metros like Mumbai.

“A 25-bps reduction can lower the EMI on a Rs 50-lakh home loan by roughly Rs 750–Rs 800 over 20 years, giving many salaried buyers the confidence to consider buying,” he said.

Agarwal emphasised disciplined budgeting and efficient use of the rate cut, such as keeping EMIs constant to reduce tenure and save on interest.

Vishal Raheja, Founder & MD of InvestoXpert Advisors, noted that the rate cut could boost confidence for buyers and investors in lifestyle-driven markets like Goa, Bengaluru, and Delhi-NCR.

“A 25-bps reduction reduces EMI on a Rs 60-lakh home loan by approximately Rs 900–Rs 1,200 per month, saving over Rs 10,000 annually,” he explained.

Lower borrowing costs can improve rental yields and make investment properties more attractive, especially in well-located, high-demand areas.

Lower rates mean cheaper loans, improved affordability, and opportunities to restructure existing debt. Homeowners and borrowers should assess whether to maintain EMIs, shorten tenure, or refinance for maximum benefit.

Meanwhile, deposit rates may soften, so savers should consider locking into longer-term deposits while rates remain favourable.