Repo rate at 5.25%: has your home loan EMI caught up?
The RBI repo rate has been 5.25% since December 2025, after four cuts that took it down from 6.50% during 2025. If your home loan is linked to the repo rate, your interest rate should now be about 1.25 percentage points lower than it was in January 2025. This post shows what that is worth on a typical loan, how to check that your bank has passed the cut on, and why the choice between a lower EMI and a shorter tenure matters more than most borrowers realise.
By FinancePaisa Editorial Team · Research & editorialPublished · 5 min read
On this page (9 sections)
How the repo rate reached 5.25%
The repo rate is the rate at which RBI lends to banks. Most new floating-rate home loans since October 2019 are priced as the repo rate plus a spread fixed by the bank, so every change flows through to borrowers.
| Policy date | Change | Repo rate |
|---|---|---|
| 7 February 2025 | −0.25 | 6.25% |
| 9 April 2025 | −0.25 | 6.00% |
| 6 June 2025 | −0.50 | 5.50% |
| 5 December 2025 | −0.25 | 5.25% |
| February to August 2026 (four meetings) | No change | 5.25% |
7 February 2025
- Change
- −0.25
- Repo rate
- 6.25%
9 April 2025
- Change
- −0.25
- Repo rate
- 6.00%
6 June 2025
- Change
- −0.50
- Repo rate
- 5.50%
5 December 2025
- Change
- −0.25
- Repo rate
- 5.25%
February to August 2026 (four meetings)
- Change
- No change
- Repo rate
- 5.25%
How a repo rate cut reaches your EMI
- Repo-linked (EBLR) loans: your rate is repo plus a fixed spread, and it must be reset at least once every three months. By now the full 1.25-point cut should be in your rate.
- MCLR-linked loans: the rate follows the bank’s MCLR, which moves more slowly, and resets only on your reset date (often every 6 or 12 months). Part of the cut may still be missing.
- Base-rate or older loans: these move slowest of all. Switching to the bank’s repo-linked product is usually worth the small conversion fee.
- Fixed-rate loans and most personal loans do not change with the repo rate at all.
Worked example: ₹50 lakh home loan taken in January 2025
You borrowed ₹50 lakh for 20 years at 8.75% in January 2025, when the repo rate was 6.50%. Your EMI is ₹44,186. After 12 EMIs you owe ₹49,03,463, and the full 1.25-point cut takes your rate to 7.5%. Your bank will offer one of two outcomes:
| What happens after the cut | Monthly EMI | Interest still to pay | Loan ends |
|---|---|---|---|
| No cut (for comparison) | ₹44,186 | ₹51,70,839 | On schedule |
| Lower EMI, same tenure | ₹40,408 | ₹43,09,652 | On schedule |
| Same EMI, shorter tenure | ₹44,186 | ₹34,84,904 | 38 months early |
No cut (for comparison)
- Monthly EMI
- ₹44,186
- Interest still to pay
- ₹51,70,839
- Loan ends
- On schedule
Lower EMI, same tenure
- Monthly EMI
- ₹40,408
- Interest still to pay
- ₹43,09,652
- Loan ends
- On schedule
Same EMI, shorter tenure
- Monthly EMI
- ₹44,186
- Interest still to pay
- ₹34,84,904
- Loan ends
- 38 months early
Lower EMI or shorter tenure: which to choose
The cut is worth ₹8,61,187 to you if you take it as a lower EMI, but ₹16,85,935 if you keep paying the same EMI and let the tenure shrink. If your current EMI is comfortable, ask your bank to keep it and reduce the tenure. RBI’s 2023 rules on floating-rate resets require lenders to offer borrowers the option of changing the EMI, the tenure or both at a reset, so ask for the option you want.
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What every 0.25% is worth on a new ₹50 lakh loan
If you are borrowing now, a small difference in the rate you negotiate adds up over 20 years:
| Interest rate | Monthly EMI | Total interest over 20 years |
|---|---|---|
| 7.25% | ₹39,519 | ₹44,84,512 |
| 7.50% | ₹40,280 | ₹46,67,118 |
| 7.75% | ₹41,047 | ₹48,51,383 |
| 8.00% | ₹41,822 | ₹50,37,281 |
7.25%
- Monthly EMI
- ₹39,519
- Total interest over 20 years
- ₹44,84,512
7.50%
- Monthly EMI
- ₹40,280
- Total interest over 20 years
- ₹46,67,118
7.75%
- Monthly EMI
- ₹41,047
- Total interest over 20 years
- ₹48,51,383
8.00%
- Monthly EMI
- ₹41,822
- Total interest over 20 years
- ₹50,37,281
How to check that your bank passed the cut on
- Find your benchmark in the sanction letter: "repo", "EBLR" or "RLLR" means repo-linked; "MCLR" or "base rate" means you may be missing part of the cut.
- Compare your current rate with the rate at sanction. On a repo-linked loan taken before February 2025, it should be about 1.25 points lower, unless your spread was changed.
- Check your latest statement for whether the bank cut your EMI or your remaining tenure, and ask for the one you prefer.
- If your rate is still well above what the bank offers new borrowers, ask for a rate reset first. If that fails, run the numbers on a balance transfer.
What happens next
The Monetary Policy Committee kept the repo rate at 5.25% with a neutral stance at its August 2026 meeting, its fourth hold in a row. Its next decision is due on 7 October 2026. A neutral stance means the next move could be in either direction, so if your loan is repo-linked, the rate you pay today is not guaranteed to last. We will update this post after the October decision.
Frequently asked questions
Sources & references
- RBI monetary policy statement, June 2025 (repo rate cut to 5.50%) — Press Information Bureau
- RBI MPC cuts repo rate by 25 bps to 6.25% (February 2025) — Business Standard
- RBI MPC August 2026: repo rate unchanged at 5.25%, neutral stance — Forbes India
- RBI FAQs on reset of floating interest rates on EMI-based loans — Reserve Bank of India
Rates, fees, eligibility, and product terms cited on this page reflect the sources above at the time of publication and may have changed since. Always verify directly with the lender or regulator.