RBI Repo Rate cut by 25 bps to 6.25%: know how much will be saved on loan of Rs 20, 30 , 40 & 50 lakh?

The six-member Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) cut the repo rate today (i.e. 7th February 2025). The repo rate is the rate at which RBI lends to other banks. After keeping the repo rate unchanged for two years, RBI has cut the repo rate by 25 basis points to 6.25%. This is the first rate cut by the RBI in the last five years, the last one being in May 2020.

If someone has taken a home loan of Rs 50 lakh at 8.50 percent interest for 30 years, then he will have to pay EMI of Rs 38,446 every month, but after the reduction in repo rate by 25 basis points, this monthly EMI will become Rs 37,563. That means Rs 883 will be saved every month.

The repo rate was 6.50% till now. Significant move comes barely a week after the Centre cut personal income tax by increasing the taxable income to Rs. 12 Lakhs per annum, to boost consumption.

While announcing the decision, RBI Governor Sanjay Malhotra also said that average inflation has remained lower since the monetary policy framework’s introduction.

When the RBI reduces its repo rate, all external benchmark lending rates (EBLR) that are linked to the repo rate will also come down, providing some relief to borrowers as their equated monthly instalments (EMIs) will reduce too.

Lenders may also reduce their home loan interest rates and interest rates on other loans linked to the marginal cost of fund-based lending rate (MCLR), where there was no hike in the full transmission of a 250 bps hike in the repo rate from May 2022 to February 2023.

Expected Repo Rate Cut in 2025: How Much Can We Anticipate?

A decline in inflation could pave the way for a significant repo rate cut this year. Experts anticipate a potential 50-75 bps reduction in CY25, contingent on the sustainability of low inflation and shifts in global monetary conditions.

Impact of 25 bps rate cut on home loan EMIs for 20, 30, 40 and 50 lakh

Check Savings on 50 Lakh home loan for 30, 20, 15 & 10 Years

Check Savings on 40 Lakh home loan for 30, 20, 15 & 10 Years

Check Savings on 30 Lakh home loan for 30, 20, 15 & 10 Years

Check Savings on 20 Lakh home loan for 30, 20, 15 & 10 Years