For the second time in a row, Reserve Bank of India (RBI) Governor Sanjay Malhotra has announced a cut of 25 basis points, i.e. 0.25%, in the repo rate, the interest rate at which the central bank lends money to commercial banks. This decision was taken after a three-day meeting of the Monetary Policy Committee (MPC), which concluded today.
Earlier in February 2025, the RBI had cut 25 basis points, the partial benefit of which was given by some banks to their customers. Now, with this new cut, home loan rates can go down further if banks pass on this benefit to their consumers.
It was widely expected that the RBI would go for yet another repo rate cut in its April monetary policy review. This latest cut in interest rates can make the EMI of home loans cheaper, but by how much?
Also read: Repo rate cut fuels real estate optimism, may boost housing demand
How much you can save on your Rs 1 crore home loan if rates come down by 50 bps
If your home loan amount is Rs 1 crore and the tenure is 20 years, and the interest rate is 9%, then your current EMI would be around Rs 89,973.
If the bank passes the full 50 bps cut, the interest rate on your loan will come down to 8.5%. Your new EMI will be around Rs 86,782. That means saving Rs 3,190 every month, about Rs 47,880 in a year, and a relief of more than Rs 7.65 lakh on the entire tenure.
Take a look at the table below to see how much money borrowers can save in EMIs per month and for entire 20-year tenure on various loan amounts:
| Original interest: 9%; Revised interest: 8.5%; Tenor 20 years | ||||||
| Amount | Original EMI | Revised EMI | Original interest | Revised interest | EMI Savings | Interest Savings |
| ₹ 30,00,000 | ₹ 26,992 | ₹ 26,035 | ₹ 34,78,027 | ₹ 32,48,327 | ₹ 957 | ₹ 2,29,700 |
| ₹ 40,00,000 | ₹ 35,989 | ₹ 34,713 | ₹ 46,37,369 | ₹ 43,31,103 | ₹ 1,276 | ₹ 3,06,266 |
| ₹ 50,00,000 | ₹ 44,986 | ₹ 43,391 | ₹ 57,96,711 | ₹ 54,13,879 | ₹ 1,595 | ₹ 3,82,833 |
| ₹ 60,00,000 | ₹ 53,984 | ₹ 52,069 | ₹ 69,56,054 | ₹ 64,96,655 | ₹ 1,914 | ₹ 4,59,399 |
| ₹ 70,00,000 | ₹ 62,981 | ₹ 60,748 | ₹ 81,15,396 | ₹ 75,79,430 | ₹ 2,233 | ₹ 5,35,966 |
| ₹ 80,00,000 | ₹ 71,978 | ₹ 69,426 | ₹ 92,74,738 | ₹ 86,62,206 | ₹ 2,552 | ₹ 6,12,532 |
| ₹ 1,00,00,000 | ₹ 89,973 | ₹ 86,782 | ₹ 1,15,93,423 | ₹ 1,08,27,758 | ₹ 3,190 | ₹ 7,65,665 |
| ₹ 1,50,00,000 | ₹ 1,34,959 | ₹ 1,30,173 | ₹ 1,73,90,134 | ₹ 1,62,41,636 | ₹ 4,785 | ₹ 11,48,498 |
On the latest interest rate cut by the central bank, Samir Jasuja, Founder & CEO, PropEquity, said, “Average housing prices have risen by approximately 50% post-Covid. At this juncture, the two consecutive cuts in repo rate, in February and April 2025, will provide a cushion to home loan borrowers as EMIs will come down.”
As home loan rates drop, fence-sitters will be encouraged to make housing purchases. Developers will benefit from reduction in borrowing cost thereby enabling them to expand and launch new projects, he added.
Also read: RBI plans review of gold loan rules; guidelines to be issued today
As per RBI rules, all floating rate loans (taken after October 1, 2019) must be linked to an external benchmark — and in most cases, this benchmark is the repo rate. That is, whenever there is a cut in the repo rate, its effect is seen on the home loan interest rate.
Meanwhile, the central bank cut the repo rate by 25 bps to 6% in its latest monetary policy review. With this rate cut, the RBI has lowered the benchmark interest rate by 50 bps in its last two MPC meetings.