By buld_online 
The Reserve Bank of India (RBI) has delivered another round of relief for home loan borrowers in 2025 by slashing the repo rate and other key policy rates by 50 basis points. This move is set to ease borrowing costs, leading to lower home loan interest rates and, consequently, reduced EMIs or shorter loan tenures for borrowers.
In a further boost, the RBI has also lowered the Cash Reserve Ratio (CRR) by 100 basis points—from 4% to 3%—providing banks with additional liquidity and further room to cut lending rates. With both the repo rate and CRR reduced, banks are expected to pass on the benefits to consumers through more competitive home loan offerings.
Additionally, the RBI has shifted its monetary policy stance from “accommodative” to “neutral.” This signals that while a total 100-bps repo rate cut has been implemented so far this year, the scope for further reductions will depend on future inflation data and economic growth performance.
“Borrowers with repo-linked home loans will be the first to benefit from today’s cut. The most competitive rates in the market are already at 7.85%, largely for balance transfers or top-tier credit scores. As liquidity improves and policy transmission strengthens, more borrowers could soon access rates under 8%, a level last seen in early 2022. Borrowers with older loans tied to the MCLR or base rate should evaluate switching. If your interest rate is 50–75 basis points higher than current offers, refinancing could mean substantial savings over the loan’s life, especially in the early years of repayment,” Adhil Shetty, chief executive officer of BankBazaar.com, told Business Today.
A 100 basis points (bps) cut in the repo rate — from 8.5% to 7.5% — can significantly ease the burden on home loan borrowers. For a Rs 1 crore loan with a 20-year tenure, this rate cut results in a monthly EMI drop from Rs 86,782 to Rs 80,559, saving borrowers over Rs 6,200 per month. Over the full tenure, this translates into a total interest saving of nearly Rs 15 lakh.
However, borrowers have two choices when rates are cut: reduce their EMIs or keep the EMIs unchanged and shorten the loan tenure. If one opts to maintain the original EMI of ₹86,782 even after the rate cut, the tenure reduces from 240 months to 204 months—effectively closing the loan 3 years earlier. This strategy yields even greater benefits, slashing total interest outgo to ₹77 lakh from ₹1.08 crore, saving over ₹31 lakh in interest alone.
These scenarios highlight the long-term financial advantages of rate cuts. While lower EMIs improve monthly affordability, retaining the EMI post-cut is the smarter move for those focused on reducing total interest and becoming debt-free faster. With a 100 bps cut, borrowers are better placed to manage both short-term liquidity and long-term financial health.
A 100 basis points (bps) repo rate cut, bringing down the interest rate from 8.5% to 7.5%, significantly impacts home loan borrowers in the following ways:
Scenario 1: Lower rate, same tenure (240 months or 20 years)
Old EMI (at 8.5%): ₹86,782.32
New EMI (at 7.5%): ₹80,559.32
Monthly savings: ₹6,223
Total interest saved: ₹1.49 lakh
Total interest paid:
Before cut: ₹1.08 crore
After cut: ₹93.34 lakh
Scenario 2: Lower rate, same EMI
Tenure reduced from 240 months to 204 months
Total interest paid: ₹77.04 lakh
Interest saved vs original: ₹3.12 lakh
Loan closed 3 years earlier
So,
If borrowers choose to lower EMI, they save on monthly cash flow but less on total interest.
If they maintain the same EMI, they close the loan earlier and save significantly more on interest.
This shows how a 100 bps rate cut benefits home loan customers both in terms of affordability and total cost reduction.