RBI Repo Rate Unchanged At 5.25%: Will Home Loan EMIs Get Cheaper Or Not? Calculate Impact

The Reserve Bank of India (RBI) has kept the policy repo rate unchanged at 5.25% for the third consecutive monetary policy while maintaining a neutral stance. The latest RBI's policy decisions are in line with estimates. However, the real estate market wished for a rate cut. But considering the current geopolitical crisis in West Asia, which has fueled a global energy crisis and inflationary woes, the latest pause in the policy repo rate is also good news.

Because unchanged interest rates mean your home loan EMIs will remain steady. The repo rate has a direct impact on floating interest rates on home loans, while it has an indirect impact on fixed interest rates on loans.

Repo Rate Impact On Home Loan Interest Rates:

Every time the RBI raises or trims the repo rate, banks revise their lending rates linked to the policy repo rate. This consequently impacts your EMIs.

Explaining in detail, PNB Housing's blog said when the repo rate is increased, banks may adjust lending rates to align with the revised borrowing costs. This can result in changes to home loan interest rates or EMIs, particularly for borrowers with floating-rate loans.

Conversely, if RBI lowers the repo rate, then borrowing costs for banks reduce, which further encourages them to adjust interest rates lower on home loans, effectively making EMIs cheaper or reducing the loan duration.

However, any change in the repo rate does not directly impact fixed home loan rates. They remain static! But during refinancing, the new repo rate will play a role in fixed home loan EMIs. Here's an example:

Example: The RBI has kept the repo rate unchanged at 6.5% w.e.f. January 14, 2025. If you have a home loan of Rs 60 lakh with a tenure of 20 years at an interest rate of 8.5%, then your current EMI would be around Rs 52,000. If the interest rate is increased due to a repo rate hike to 9%, EMI would rise to around Rs 54,000, increasing the monthly outflow.

Will Home Loan EMIs Get Cheaper Or Expensive After RBI's Policy On June 5, 2026?

For homebuyers, Yashank Wason, Managing Director, Royal Green Realty, said unchanged interest rates mean manageable EMIs, which will improve the rate of potential purchasers. For developers, this unchanged stance will accelerate the project launches and completion timeline.

Overall, the decision is a welcome move and positive for the real estate market and homebuyers.

Abhay Mishra, CEO & President, Jindal Realty, said the latest policy
reassures homebuyers by keeping borrowing costs stable and helps sustain demand momentum. For developers, it provides clarity for planning and execution. Going ahead, policy support and improved liquidity will be key to unlocking the sector's full potential and ensuring steady, inclusive growth across markets.

"Predictable borrowing costs support efficient project planning and timely execution, while buyers continue to benefit from stable lending rates and manageable EMIs," said Dharmendra Raichura, VP & Head of Finance at Ashar Group.

How to Protect Yourself from Repo Rate Fluctuations?

There are six ways to protect your home loan EMIs during repo rate fluctuations, as per PNB Housing Blog.

1. Opt for Fixed-Rate Loans: Choose a fixed-rate home loan to keep EMIs stable, unaffected by repo rate changes.

2. Prepayment of Loan: Regularly make prepayments to reduce the principal, thus lowering the interest burden.

3. Increase Loan Tenure: In case of rising rates, you can extend the tenure to keep EMIs affordable.

4. Refinance Loan: Refinance your loan when favourable rates are available, especially if the repo rate decreases.

5. Monitor Repo Rate Trends: Stay updated on the repo rate changes to make timely decisions on your loan.

6. Maintain a Good Credit Score: A higher credit score can help you secure better rates, reducing the impact of rate hikes.

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