Home loan EMIs seem to be further easing after the Reserve Bank of India (RBI) on December 5 cut its repo rate by another 25 basis points (bps) to 5.25%. Cumulatively, the central bank has slashed the key rate at which it lends to commercial banks in India by 125 bps in 2025.
Banks, including private sector lenders, have already adjusted their lending rates in line with the RBI repo rate. After the RBI’s latest rate cut, banks have again begun trimming lending rates. The cumulative impact of RBI rate cuts has led to monthly savings of nearly Rs 4,000 on home loan EMIs for borrowers with Rs 50 lakh loan for a 20-year tenure. In this story, we will learn about the banks that have slashed lending rates post the RBI policy announcement.
The latest policy move came against the backdrop of easing inflation, strong economic growth, and the RBI’s comfort with liquidity conditions. For borrowers, this means lower interest costs and a lighter EMI burden in the months ahead.
A year of rate cuts designed to revive sentiment
The RBI began the year cautiously, delivering its first 25 bps cut in February. Another reduction followed in April, and a sharper 50 bps cut came in June to spur demand and improve affordability. Through August and October, the central bank paused to assess inflation and growth trends before resuming its easing cycle in December.
The cumulative 1.25 percentage point reduction has now made home loans significantly cheaper compared to the start of the year, reviving affordability for both new homebuyers and existing borrowers.
Banks begin passing on the recent repo rate cut benefit
Soon after the December announcement, state-run lenders such as Punjab National Bank, Bank of Baroda, Bank of India, Indian Bank, HDFC Bank and Bank of Maharashtra have moved first, reducing their rates. This means borrowers whose loan interest is directly pegged to RBI’s benchmark will see their rates fall automatically on their scheduled reset dates.
More banks are expected to follow. Market chatter already suggests that the best borrowers may soon see home loan rates closer to levels last witnessed during the pandemic years. This rate movement is expected to intensify competition among lenders, especially as housing demand has remained strong despite rising property prices.
Different banks have lowered their RLLR (Repo Linked Lending Rate), RBLR (Repo Based Lending Rate) and MCLR (Marginal Cost of Funds Based Lending Rate) MCLR-linked rates. Depending on loan tenors, existing borrowers are likely to benefit from lowered EMIs of their loans or a shorter loan tenure.
RLLR is usually considered the best option for a home loan borrower due to its high transparency and fast reflection of RBI repo rate changes. RBLR can be good for borrowers with excellent credit scores. MCLR is an internal benchmark with a slow rate of transmission.
HDFC Bank cuts MCLR
HDFC Bank has cut its MCLR, which will benefit borrowers whose loans are linked to this benchmark, by up to 5 basis points (bps) across loan tenures. With this, MCLR rates of the bank now range from 8.30% to 8.55%, varying as per the loan tenure.
PNB cuts RLLR
Punjab National Bank has also cut its RLLR from 8.35% (including a BSP of 10 bps) to 8.10% (including a BSP of 10 bps). The new rates are effective from December 6, 2025.
“The Exchange is hereby informed that consequent upon a decrease in the repo rate by the RBI on 05.12.2025, the Bank has revised Repo Linked Lending Rate (RLLR) from 8.35% (including BSP of 10bps) to 8.10% (including BSP of 10bps) with effect from 06.12.2025,” the bank said in an exchange filing.
Bank of Baroda trims BRLLR rate
Bank of Baroda has cut its Benchmark Retail Loan Lending Rate (BRLLR). According to the bank notification, the new rate will be decreased from 8.15% to 7.90%.
Indian Bank cuts RLLR
Indian Bank has cut its repo-linked benchmark lending rate (RLLR) from 8.20% to 7.95%. The revised rates are effective from December 6, 2025, the bank said in a release.
Bank of India cuts RBLR
Bank of India has also cut its Repo Based Lending Rate (RBLR). Its rate has been cut from 8.35% to 8.10% with effect from December 5, 2025.
“This is to inform that the bank’s Repo Based Lending Rate (RBLR) has been changed to 8.10% with immediate effect from 05.12.2025,” the Bank of India said in a notification.
Bank of Maharashtra trims home, auto loan rates
Bank of Maharashtra has cut its home loan rates from 7.35% to 7.10%. The bank has also trimmed the interest rate on car loans from 7.70% to 7.45%, making vehicle loans cheaper for new borrowers. The bank has also announced a waiver on processing fees on these loans, lowering the upfront cost for customers.
How banks transmit RBI’s rate cuts
Unlike earlier years when rate cuts took time to reach borrowers, the introduction of externally benchmarked lending rates has made the process more transparent and time-bound.
Here’s how it works in simple terms:
-RBI announces the new repo rate.
-Each bank’s internal asset-liability committee reviews costs and competition.
-For repo-linked loans, the benchmark falls automatically once the repo rate is reduced.
-Borrowers see the impact when their loan reset date arrives – usually once every three months.
-Depending on the bank’s policy and borrower preference, the revised rate either reduces the EMI or shortens the loan tenure. Banks must also disclose rate changes through statements or notifications.
New borrowers benefit quickly, but old borrowers must review options
The benefit of lower rates is felt fastest by new home loan applicants because lenders immediately update their advertised card rates after policy changes. Existing borrowers with repo-linked loans will also see reductions, though with a lag due to reset cycles.
However, those on older MCLR or base-rate linked loans may see slower transmission. Experts suggest that such borrowers evaluate whether shifting to a repo-linked loan makes financial sense after factoring in switching costs.
What should borrowers do now?
With more banks expected to adjust their rates over the coming days, experts advise borrowers to:
-Track loan reset dates
-Compare prevailing rates across lenders
-Decide whether to opt for lower EMIs or faster loan closure
-Consider refinancing if existing rates remain high
The housing market has seen a steady rise in demand, but affordability had tightened due to higher rates in the last two years. The RBI’s rate cuts through 2025 and the latest December move are expected to ease this stress, especially for salaried borrowers and first-time home buyers.
Adhil Shetty, CEO, BankBazaar, says, “The latest rate cut is a welcome step for borrowers who have been managing higher repayments for several months. With inflation easing and growth holding steady, banks now have more room to lower lending rates. Floating-rate home loan customers will be the first to see EMIs soften, easing the strain that built up during the high-rate cycle. Even a modest reduction creates some breathing space in the monthly budget.”
“For new buyers, lower borrowing costs can revive plans that were on hold when EMIs felt stretched. As rates ease, affordability improves in a meaningful way, giving families a clearer view of what they can sustainably commit to over the long term.”
Impact on EMIs on account of 125 bps cumulative rate cuts by RBI
| Parameter | Original Loan | Lower Rate, Lower EMI | Lower Rate, Same EMI, Lower Tenor |
| Loan | ₹ 50,00,000.00 | ₹ 50,00,000.00 | ₹ 50,00,000.00 |
| Tenor (months) | 240 | 240 | 198 |
| Rate | 8.50% | 7.25% | 7.25% |
| EMI | ₹ 43,391.16 | ₹ 39,518.80 | ₹ 43,391.16 |
| Total Interest | ₹ 54,13,878.80 | ₹ 44,84,511.82 | ₹ 35,81,830.37 |
| Interest Saved | ₹ 0.00 | ₹ 9,29,366.98 | ₹ 18,32,048.43 |
| EMI Saved | ₹ 0.00 | ₹ 3,872.36 | ₹ 0.00 |
| Tenor Reduced | 0 | 0 | 42 months |
(Numbers approximate. Actual numbers may depend on lender’s unique policies. Source: Bankbazaar.com)
A cumulative 125-basis-point (bps) cut in the repo rate by the RBI would have made a significant difference to long-term home loan costs.
For a Rs 50 lakh loan taken for 20 years, a reduction in the interest rate from 8.5% to 7.25% brings down the EMI by nearly Rs 3,900 if the borrower chooses to keep the loan tenure unchanged.
As banks publish their revised rate cards, borrowers may find that home loan pricing is again becoming competitive — something that could support momentum in the property market as we step into 2026.
