No rate cut by RBI, but home loan borrowers can still save big on EMIs – experts suggest THIS

After cutting the repo rate by a total of 100 basis points (bps) in three consecutive monetary policy review meetings this year, the Reserve Bank of India (RBI) on Wednesday decided to keep the policy interest rates stable in its latest monetary policy meeting. That is, now the repo rate will remain at 5.5%. This was the third MPC meeting of the current financial year 2025-26.

Announcing the status quo decision after the MPC meeting held from August 4 to 6, RBI Governor Sanjay Malhotra said that the impact of a 100 bps cut in repo rate is “still unfolding”.

After the last three cuts, there were speculations that perhaps this time the central bank would hold the key rate and adopt a ‘wait and watch’ approach.

Will the EMI of home loan increase or decrease?

With the central bank applying the brake on rate cut this time, it is quite clear that loan borrowers who were probably hoping for further easing in rates for their borrowings might have to wait for some time as banks too would reevaluate the rate scenario in the wake of the RBI MPC move.

Current home loan rates of banks (as per BankBazaar data)

RBI keep repo rate unchnaged: What it means for loan borrowers?

With the policy rate remaining stable, there will be no change in the EMI of the existing loan at present, but if you are repaying the loan at a high interest rate, then the balance transfer option can be very beneficial for you.

Adhil Shetty (CEO, BankBazaar) says that “with policy rates unchanged for now, home loan EMIs may hold steady in the near term. But there’s room for borrowers to optimise. Consider this: on a Rs 40 lakh loan over 20 years, switching from a 9% loan to one at 7.75% can lower your EMI by around Rs 3,151 and save you nearly Rs 7.56 lakh in interest. Several lenders are already offering such rates to high-credit borrowers, especially on balance transfers. If you’re still servicing a costlier loan, moving to a repo-linked product can unlock meaningful long-term gains.”

With the repo rate remaining stable, not only home loans, but rates on auto loans, personal loans and MSME loans are also unlikely to change at the moment. Banks are now adopting the strategy of ‘selective lending’ – that is, loans are being offered at cheaper rates to those with good credit scores.

As it is clear from the table shown above, public sector banks are still offering cheaper home loans than private banks. For example, Canara and Union Bank are offering home loans at 7.30%, while private banks like Yes Bank are charging up to 9%.

So, it is important to compare interest rates before taking a loan, and it would be wise to consider options like balance transfer.