The Reserve Bank of India (RBI) today decided to leave the repo rate unchanged at 5.25%, signalling a pause after an aggressive rate-cut cycle in 2025. For borrowers with floating-rate home loans, the message is clear: EMIs are unlikely to fall further for now but the good thing is that the risk of a sudden increase also looks limited.
The Reserve bank’s Monetary Policy Committee (MPC) met on the 4th, 5th and 6th of February to deliberate and decide on the policy repo rate. After a detailed assessment of the evolving macroeconomic conditions and the outlook, the MPC today voted unanimously to keep the policy repo rate unchanged at 5.25%.
How RBI cut rates through 2025
Between February and December 2025, the RBI cut the repo rate by a cumulative 125 basis points, bringing it down from 6.50% to 5.25% to support economic growth.
The easing cycle unfolded as follows:
February 2025: Repo rate cut by 25 bps to 6.25%
April 2025: Another 25 bps cut to 6.00%
June 2025: A sharper 50 bps cut to 5.50%
August and October 2025: Rates held steady
December 2025: Final 25 bps cut to 5.25%
These sustained cuts pushed home loan rates to their lowest levels since April 2020, easing the repayment burden for borrowers across the country.
Why borrowers felt the benefit quickly
Most home loans today are linked to external benchmarks such as EBLR or MCLR, which ensured faster transmission of RBI’s rate cuts. As lending rates fell, borrowers benefited in two key ways—lower monthly EMIs or shorter loan tenures, both of which reduced the total interest paid over time.
For many households, the savings helped cushion the impact of high living costs and inflation.
Where home loan rates stand now
As of January 30, 2026, public sector banks continue to offer the most competitive home loan rates, while private banks charge a premium.
Public sector banks are offering home loans in the 7.15–7.30% range, led by Canara Bank and Union Bank at the lower end. In comparison, private lenders such as HDFC Bank and Axis Bank are charging close to 8%, while rates at some banks go as high as 9%.
Home loan rates – Top 10 banks
| Bank | Rate |
| Public-sector banks | |
| Bank of Baroda | 7.20% |
| Canara Bank | 7.15% |
| Punjab National Bank | 7.30% |
| State Bank of India | 7.25% |
| Union Bank | 7.15% |
| Private banks | |
| ICICI Bank | 7.45% |
| Kotak Mahindra Bank | 7.70% |
| HDFC Bank | 7.90% |
| Axis Bank | 8.00% |
| Yes Bank | 9.00% |
| Data as on respective banks’ website on Jan 30, 2026; Floating rate loans up to Rs.30 lakh; Compiled by BankBazaar.com; | |
“The RBI’s decision to hold rates signals a preference to watch inflation, liquidity, and transmission before moving further. Most of the easing done so far has already flowed into retail lending, which is why home loan rates remain relatively competitive despite the pause. Affordability continues to be supported by stable spreads, lender competition, and selective concessions,” says Adhil Shetty, CEO, BankBazaar.com.
He further says that borrowers can still optimise costs by keeping EMIs higher to shorten loan tenures and reduce interest outgo, while balance transfers remain relevant for incremental savings.
Real impact: What the 125 bps cut means in rupees
The true benefit of lower rates becomes clearer when seen through actual loan numbers. On long-tenure loans, even small changes in interest rates translate into significant savings over time.
Impact on Rs 50 lakh home loan (20-year tenure)
Lower interest rates have reduced both EMIs and the total interest burden for borrowers.
| Cumulative Impact of 125 bps repo rate cut on Rs.50 lakh loan | ||
| Original Loan | Lower Rate, Lower EMI | |
| Loan | ₹ 5,000,000.00 | ₹ 5,000,000.00 |
| Tenor | 240 | 240 |
| Rate | 8.50% | 7.25% |
| EMI | ₹ 43,391.16 | ₹ 39,518.80 |
| Total Interest | ₹ 5,413,878.80 | ₹ 4,484,511.82 |
| Interest Saved | ₹ 0.00 | ₹ 929,366.98 |
| EMI Saved | ₹ 0.00 | ₹ 3,872.36 |
| Numbers approximate. Actual numbers may depend on lender’s unique policies. Source: Bankbazaar.com | ||
Impact on Rs 75 lakh home loan (20-year tenure)
For higher loan amounts, the savings are even more pronounced, magnifying the benefit of RBI’s rate cuts.
| Impact of 125 bps repo rate cut on Rs.75 lakh loan | ||
| Original Loan | Lower Rate, Lower EMI | |
| Loan | ₹ 7,500,000.00 | ₹ 7,500,000.00 |
| Tenor | 240 | 240 |
| Rate | 8.50% | 7.25% |
| EMI | ₹ 65,086.74 | ₹ 59,278.20 |
| Total Interest | ₹ 8,120,818.20 | ₹ 6,726,767.73 |
| Interest Saved | ₹ 0.00 | ₹ 1,394,050.47 |
| EMI Saved | ₹ 0.00 | ₹ 5,808.54 |
| Numbers approximate. Actual numbers may depend on lender’s unique policies. Source: Bankbazaar.com | ||
What the tables show
The numbers clearly highlight how a 125 basis point reduction in interest rates can lead to:
Monthly EMI savings running into thousands of rupees
Total interest savings of Rs 9–14 lakh over a 20-year period, depending on the loan size
Borrowers can use this relief either to ease monthly cash flow by opting for lower EMIs or to close their loans faster by keeping EMIs unchanged and cutting down the tenure.
What RBI’s pause means for borrowers now
By keeping the repo rate unchanged, the RBI has indicated that the bulk of the easing may be over for now. For home loan borrowers, this means: EMIs are likely to remain stable, further sharp rate cuts appear unlikely in the near term and future movement will depend on inflation and growth trends.
For existing borrowers, this could be a good time to review loan terms, reset tenures, or explore refinancing options. For new homebuyers, current rates remain attractive compared to levels seen before 2025.
Summing up…
The RBI’s decision to hold rates steady does not take away the gains borrowers have already made. After a year of aggressive cuts, home loans are cheaper, EMIs are lighter, and long-term interest costs are lower. For now, borrowers can enjoy the relief already built into their EMIs—while staying prepared for the next move in interest rates.