Good news for lakhs of home loan borrowers across India! The Reserve Bank of India (RBI) has reduced the repo rate to 5.25% in its December 2025 policy meeting. This is the fourth cut in 2025, totaling 125 basis points reduction. From January 2026, banks will pass on more benefits, leading to lower EMIs and cheaper home loans.
This major relief comes at a perfect time as inflation remains low and economic growth stays strong at 7.3% projected for FY 2026.
Know Complete Details of RBI Repo Rate Cut 2026
The RBI Monetary Policy Committee made these cuts in 2025:
- February 2025: -25 bps (to 6.25%)
- April 2025: -25 bps (to 6.00%)
- June 2025: -50 bps (to 5.50%)
- December 2025: -25 bps (to 5.25%)
Repo rate is the key rate at which RBI lends to banks. Lower rate means banks can offer cheaper loans.
Most home loans taken after 2019 are linked to repo rate (EBLR). These get quick benefits. Older MCLR loans will also see reductions soon.
Current home loan rates from January 2026:
- Public banks (like Bank of India, Bank of Maharashtra): Starting 7.10% to 7.45%
- Private banks (HDFC, ICICI): 7.10% to 7.90%
How Much EMI Relief Will You Get in 2026?
See how much you can save (for 20-year loan, approximate after full 125 bps benefit):
- ₹50 lakh loan: Old EMI ₹43,500 → New EMI ₹39,500 → Monthly saving ₹4,000 → Total saving ₹10-12 lakh
- ₹75 lakh loan: Old EMI ₹65,000 → New EMI ₹59,000 → Monthly saving ₹6,000 → Total saving ₹15-18 lakh
- ₹1 crore loan: Old EMI ₹87,000 → New EMI ₹79,000 → Monthly saving ₹8,000 → Total saving ₹20-22 lakh
You can keep EMI same and reduce loan tenure to save more interest.
Will Home Loan Rates Drop Further in 2026?
Many experts say yes for more relief:
- Low inflation (around 2%) gives RBI space.
- Possible another 25 bps cut in February 2026.
- Banks will fully pass 2025 cuts by March 2026.
But watch global risks like US policies. Women and senior citizens get extra 0.05%-0.20% discount.
How It Affects You – Big Benefits for Home Buyers
- Existing borrowers: Lower monthly outflow from January 2026.
- New buyers: Better eligibility, bigger loans for same EMI.
- Real estate: More demand in affordable housing segment.
Tip: Switch to repo-linked loan if on old scheme. No prepayment charges on floating loans.
This is a golden opportunity for middle-class families to buy or refinance homes in 2026.
What do you think about this RBI decision? Will you reduce EMI or shorten tenure? Comment below and share your views!
Stay updated with us for all latest banking and finance rules in 2026.
Sources: RBI Official Monetary Policy Statements, Bank Websites, Economic Surveys 2025-26.