RBI Cuts Repo Rate by 50 Bps: Will EMIs Get Lower? Here’s How Home Loan Buyers Could Benefit

Home loan interest rates are likely to decline further following the Reserve Bank of India's (RBI) announcement of a 50 basis point cut in the repo rate, reducing it to 5.5 percent . The decision was made under the leadership of RBI Governor Sanjay Malhotra on Friday in the June Monetary Policy Committee (MPC) meeting.

The latest rate cut marks the third time in 2025 that the RBI has reduced the repo rate. Earlier this year, the central bank lowered the key lending rate to 6.25% in February and further to 6% in April. In both the February and April monetary policy reviews, the RBI implemented 25 basis point (bps) cuts.

RBI Cuts 50 BPS Repo Rate on June MPC Meeting

The central bank has implemented an additional 50 basis point cut in the repo rate on Friday, which is expected to bring significant relief to home loan borrowers, particularly those with floating interest rates. As lenders begin to transmit the benefit of this rate reduction, borrowers can expect a noticeable decrease in their EMIs in the near future.

Additionally, the RBI Governor announced a shift in the monetary policy stance from 'accommodative' to 'neutral'. This change signals the possibility of further rate reductions ahead, which could lead to even lower interest rates for home loan borrowers in the coming months.

RBI has maintained its Gross domestic product (GDP) growth forecast for the financial year 2025-26 (FY26) at 6.5%. The quarterly projections remain unchanged as well, with GDP growth expected at 6.5% in Q1FY26, 6.7% in Q2FY26, 6.6% in Q3FY26, and 6.3% in Q4FY26. This steady outlook reflects the RBI's confidence in sustained economic momentum over the coming year.

As per RBI guidelines, banks must review interest rates at least once every quarter, although the timing of any rate changes can differ based on individual loan agreements. Additionally, new borrowers are likely to benefit from reduced rates in the near term.

How to Calculate Home Loan EMI After Latest RBI Repo Rate Cut?

If you have a home loan of Rs 50 lakh for a 20-year term at an interest rate of 6%, your monthly EMI would be about Rs 35,816. However, if the interest rate drops by 50 basis points to 5.5%, your EMI would reduce to approximately Rs 34,506. This means you would save around Rs 1,310 every month. In some cases, instead of reducing the EMI, banks may choose to shorten the loan tenure while keeping the monthly payment the same. This helps you repay your loan faster and save on overall interest.

50 BPS Cut, A Surprising Move! Check What Expert's Say

Chintan Panchmatya, Founder of Switch My Loan, shared his views on the unexpected rate cut. "The 50 bps rate cut has certainly come as a surprise, given the global macroeconomic cues and the domestic political landscape post-elections. This bold step by the RBI offers some immediate relief to consumers. We foresee a potential surge in demand for big-ticket purchases-cars, personal gadgets, and homes-driven by lower EMIs."

The expert added that sectors such as Consumer Durables, Auto, Personal Loans, and Home Loans are likely to witness strong growth in the current quarter. Additionally, he anticipates a rise in loan balance transfer activity, as borrowers look to take advantage of the reduced interest rates.

"The Consumer Durable, Auto, Personal Loan, and Home Loan categories are poised for strong growth this quarter. We also anticipate increased activity in loan balance transfers as borrowers seek to capitalize on lower interest rates."