The Reserve Bank of India (RBI) on Friday announced its second bi-monthly monetary policy decision of the current financial year. It again kept the repo rate unchanged at 5.25%, sustaining the pause in the rate-cut cycle that started in early 2025.
As a result, existing borrowers will not see any change in loan rates or EMIs.
Though the central bank maintained the status quo, home loan borrowers are still benefiting from the central bank’s earlier easing cycle, even though the RBI paused interest rates during its June 2026 Monetary Policy Committee (MPC) meeting.
This is because the RBI has lowered the repo rate four times since the easing cycle began in early February 2025. So far, the rate has been lowered by 1.25% (125 basis points) from 6.50% to 5.25%.
Impact on home loan borrowers
“For households, the immediate impact is stability. Existing borrowers will not see any change in loan rates or EMIs, while deposit rates are likely to remain broadly supported,” said Adhil Shetty, CEO, BankBazaar.
“For borrowers, the gains from 125 basis points of cuts since early 2025 remain fully intact. For depositors, current rates remain attractive, and locking in across tenures makes sense. The MPC has chosen to wait for greater clarity before acting in either direction, and that is a considered and reasonable call,” he further added.
The impact can be substantial for borrowers. Let’s take an example of a Rs 50 lakh home loan with a 20-year tenure.
A reduction in the interest rate from 8.5% to 7.25% can lower the monthly EMI by nearly Rs 3,900 and reduce the total interest outgo by more than Rs 9.2 lakh over the life of the loan, which means that existing borrowers linked to external benchmark rates continue to enjoy significant savings from the earlier cuts.
Here’s a look at how the cumulative 125-basis-point repo rate reduction has changed the repayment burden on a Rs 50 lakh home loan.
| Cumulative Impact of 125 bps repo rate cut on Rs. 50 lakh loan | ||
| Original Loan | Lower Rate, Lower EMI | |
| Loan | Rs 50,00,000.00 | Rs 50,00,000.00 |
| Tenor | 240 | 240 |
| Rate | 8.50% | 7.25% |
| EMI | Rs 43,391.16 | Rs 39,518.80 |
| Total Interest | Rs 54,13,878.80 | Rs 44,84,511.82 |
| Interest Saved | Rs 0.00 | Rs 9,29,366.98 |
| EMI Saved | Rs 0.00 | Rs 3,872.36 |
| Numbers approximate. Actual numbers may depend on the borrower’s profile; Source: Bankbazaar.com | ||
Key takeaway
For both new borrowers and MCLR-linked home loan borrowers, the RBI’s June 2026 decision means stability rather than relief. Home loan rates are expected to remain broadly unchanged, EMIs are unlikely to fall immediately, and borrowers will need to wait for either future RBI rate cuts or bank-specific reductions in lending rates before seeing meaningful savings.
Borrowers planning to take a home loan can still benefit from the rate cuts that occurred earlier in the easing cycle, but they should compare offers across banks and housing finance companies before locking in a loan.
Disclaimer: The EMI and interest savings figures mentioned in this article are illustrative and based on a hypothetical Rs 50 lakh home loan with a 20-year tenure. Actual loan terms, interest rates, EMI amounts, and savings may vary depending on the lender’s policies, the borrower’s credit profile, loan type, repayment history, and the extent of rate transmission by the bank or housing finance company. Readers should consult their lender or a qualified financial advisor before making borrowing or refinancing decisions.
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