Big Savings Ahead For Home Loan Borrowers With Lower EMIs

The recent repo rate cut, along with the revised tax slabs introduced in the Union Budget 2025 for the new tax regime, is expected to enhance loan eligibility and repayment capacity in the upcoming fiscal year.

On Friday, Reserve Bank of India (RBI) Governor Sanjay Malhotra announced a 25-basis point reduction in the repo rate, bringing it down to 6.25 percent. This move is expected to lead to lower interest rates and reduced equated monthly installments (EMIs) for borrowers.

“Growth-inflation dynamics create space for the MPC to support growth while staying focused on bringing inflation in line with targets. The MPC unanimously decided to reduce the policy repo rate by 25 basis points to 6.25 percent,” Malhotra said during his address.

Most retail floating-rate loans sanctioned after October 1, 2019, are tied to an external benchmark, usually the repo rate. Therefore, home loan borrowers will directly benefit from the rate cut, as it will lower both their interest burden and EMIs, offering significant relief.

The rate cut is driven by easing inflation concerns and government efforts to stimulate economic growth. December’s inflation rate, which dropped to 5.22 percent from 5.48 percent in the previous month, was primarily influenced by the slowdown in food price inflation.

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