RBI MPC: How Much Will Your EMI Reduce on a ₹50 Lakh Home Loan?

RBI MPC: The Reserve Bank of India (RBI) has cut the repo rate by 0.25%, bringing it down from 6.50% to 6.25% after five years. This decision by the Monetary Policy Committee (MPC) on February 7, 2025, is expected to reduce home loan EMIs, providing relief to borrowers.

How Does the Repo Rate Cut Affect Home Loan EMIs?

With a lower repo rate, banks are expected to reduce home loan interest rates, making EMIs more affordable. Let’s break down the impact on different loan amounts.

EMI Reduction on Different Loan Amounts

Home Loan Amount    Interest Rate (Before)    EMI (Before)    Interest Rate (After)    EMI (After)    Savings per Month
₹25 Lakh (20 years)    9.65%    ₹23,549    9.40%    ₹23,140    ₹409
₹40 Lakh (20 years)    9.65%    ₹37,678    9.40%    ₹37,024    ₹654
₹50 Lakh (20 years)    9.65%    ₹47,097    9.40%    ₹46,281    ₹816
This means borrowers can expect EMI savings of ₹409 to ₹816 per month, depending on their loan amount.

Why is This Repo Rate Cut Important?

First Reduction in Five Years – The last time RBI cut the repo rate was in May 2020. Since May 2022 to February 2023, rates increased by 2.50%, making home loans expensive.
Encourages Home Buying – Lower EMIs make real estate investments more attractive, benefiting homebuyers and the property market.
Boosts Economic Growth – Cheaper loans can increase spending and investment, supporting overall economic expansion.

What Should Home Loan Borrowers Do?

Existing borrowers (floating rate) – Your EMI will reduce automatically as banks adjust interest rates.
New borrowers – This is a good time to take a home loan as interest rates are expected to decline further.
Consider refinancing – If you have an existing high-interest loan, check with your bank for lower rates or switch to a lender offering better terms.

The RBI MPC’s repo rate cut is a positive move for homebuyers and existing borrowers. With EMIs becoming more affordable, this is a great opportunity to invest in real estate or refinance existing loans. Stay updated as banks announce new home loan rates in response to this decision.