The Reserve Bank of India (RBI) has once again cut the repo rate, this time by 25 basis points. This comes after a cumulative reduction of 50 basis points over the last two months—a move that’s sparking questions for many Indian homeowners: Will this lower my EMI?

If your home loan is linked to external benchmark lending rates (EBLR) or the Marginal Cost of Lending Rate (MCLR), you could be in for some relief. But as always, the extent of benefit will vary based on how your loan is structured—and how much of the rate cut your bank decides to pass on.

What Exactly Happened?

On April 9, 2025, the RBI’s Monetary Policy Committee (MPC) announced a 25-basis point reduction in the repo rate. This is the second cut in as many months, following a 25-bps reduction in February that brought the rate down from 6.5% to 6.25%.

Now, the repo rate stands at 6.0%, and this decision could ease the financial burden of millions of home loan borrowers across India.

Who Benefits from the Repo Rate Cut?

Home loan interest rates in India are often linked to:

• EBLR (External Benchmark Lending Rate) – most commonly the repo rate
• MCLR (Marginal Cost of Lending Rate) – used before October 2019

If your loan is linked to either of these benchmarks, your EMI is likely to decrease.

Repo Rate Changes Over Time

Home loans linked to the repo rate:

If your floating-rate home loan is directly tied to the repo rate, then the reduction should reflect in your EMI within a quarter, depending on your bank’s reset frequency.

Home loans linked to MCLR:

Though the impact is less immediate than repo-linked loans, MCLR-based loans are still influenced by changes in the repo rate. A cut in repo brings down banks’ marginal costs, which eventually affects MCLR, and therefore, your interest rate.

Quick Background: MCLR vs Repo-Linked Rates

• Before October 2019: Most floating-rate loans were linked to MCLR, which depends on factors like deposit rates, operating costs, and the CRR.
• After October 2019: RBI mandated that new floating-rate loans be linked to external benchmarks, with the repo rate being the most widely adopted.

That means repo rate cuts now have a more direct impact on new home loans.

Will EMIs Drop for Everyone?

Not necessarily.

While RBI’s move sets the stage for lower interest rates, banks are not obligated to pass the full benefit to consumers. Some may pass on only part of the 50-basis point reduction, especially to MCLR-based loans.

Also, the reset period of your loan matters—if your interest rate resets only once a year, you might have to wait months to see the change.

What About Fixed-Rate Loans?

If you’ve taken a loan with a fixed interest rate, such as many personal loans or older fixed-rate home loans, this repo rate cut won’t make a difference to your EMI.

Fixed-rate loans are immune to repo fluctuations and will continue with the agreed-upon rate.

Expert View: What It Means for the Economy

Experts believe this rate cut is part of a larger strategy to support growth amid global uncertainty.

“We expect the monetary policy to favor higher transmission for Economy growth in today’s uncertain global scenario. We expect market rates to be favorably supported with 10-yr continuing to trade in the range of 6.40%-6.60%, with upward bias. Short-term yields up to 1 year are expected to trade in the prevailing range following the sharp rally of 75-100 bps in the last one month,”
— Amit Somani, Deputy Head-Fixed Income, Tata Asset Management

Lower EMIs put more disposable income in consumers’ hands, boosting spending and ultimately stimulating growth.

Final Takeaway: Check Your Loan Type

If you’re wondering whether this RBI move will lighten your monthly EMI load:

• Check if your loan is linked to the repo rate or MCLR
• Review your reset dates
• Talk to your lender about transmission timelines