When the Reserve Bank of India (RBI) cut the repo rate on June 6, 2025, it had a direct impact on borrowers, especially those with home loans. The rbi repo rate cut home loan connection becomes vital when assessing EMIs and interest rates. In this guide, we’ll walk you through how this latest repo rate adjustment works, and what it means for your home loan.
What Is the RBI Repo Rate?
The repo rate is the rate at which the RBI lends to banks. When RBI cuts the repo rate, banks can borrow more cheaply and, in turn, often pass those savings to borrowers. The June 6, 2025 cut reduced the rate by 50 basis points to 5.50 %, marking the third cut this year and totaling a 100 bps reduction in the first half of 2025.
Why Does RBI Cut Repo Rates?
Repo rate cuts aim to:
- Encourage economic growth
- Increase liquidity in the banking system
- Lower borrowing costs
- Support sectors like housing and MSMEs
The June cut was part of a broader strategy; RBI even shifted its stance from “accommodative” to “neutral,” signaling a pause but not an end to easing.
How the June 6 Cut Impacts Home Loans
Borrowers benefit most if their loans are linked to an external benchmark like Repo Linked Lending Rate (RLLR) or EBLR. Public and private banks alike have quickly revised their home loan rates downward by up to 50 bps, making loans more affordable.
Key Effects:
- Lower EMIs – Monthly payments drop with interest rates.
- Increase in Eligibility – You may qualify for a higher loan amount.
- Faster Benefit – Cuts take effect soon on repo-linked loans.
Loan Types and Their Response
| Loan Type | Effect of June Repo Rate Cut |
|---|---|
| Fixed-Rate Home Loan | No immediate change |
| Floating-Rate (RLLR/EBLR) | Direct reduction after June 6 |
| MCLR-Linked Loans | Benefit comes later at reset period |
Loans indexed to repo rates reflect changes quickly compared to fixed or MCLR loans.
Home Loan Rate Changes from Major Banks
| Bank Name | Rate Before Jun 6 | New Rate | Cut (%) |
|---|---|---|---|
| SBI | 8.50 % (RLLR/EBLR) | ~8.00 % ± | ~0.50 % |
| PNB / BoB / BOI | ~8.70 % | ~8.20 % | ~0.50 % |
Rates are indicative and vary by borrower profile.
EMI Savings: Sample Comparison
| Loan Amount | Tenure | Rate Before | EMI Before | Rate After | EMI After |
|---|---|---|---|---|---|
| ₹50 Lakhs | 20 Y | 8.60 % | ₹43,573 | 8.10 % | ₹41,139 |
| ₹75 Lakhs | 25 Y | 8.70 % | ₹61,315 | 8.20 % | ₹58,927 |
Even a 0.50 % fall in rate can save thousands monthly.
EMI Calculator
✅ Step-by-Step Process to Get EMI Reduced
Step 1: Identify Your Home Loan Type
Check whether your home loan is:
| Loan Type | Action Required? |
|---|---|
| Repo-linked (RLLR/EBLR) | EMI should auto-adjust |
| MCLR-linked | Wait for reset date or consider switching |
| Fixed-rate | No change unless you switch |
You can find this detail in your loan agreement or ask your bank.
Step 2: Contact Your Bank or Lender
- Visit the nearest branch or call customer support.
- Ask whether your loan rate has been revised after the latest RBI repo rate cut.
- Request the updated interest rate and the new EMI amount.
- If you’re eligible, the bank should offer to revise your EMI or reduce tenure.
Step 3: Submit a Request (If Not Auto-Adjusted)
If your EMI hasn’t changed yet:
- Repo-linked loan: Ask why your rate wasn’t updated.
- MCLR loan: File a request to switch to repo-linked or wait for next reset date.
- Fixed-rate loan: You can apply for conversion or refinance to a floating rate.
Documents Needed (if conversion is applicable):
- Loan account number
- Identity proof
- Address proof
- Recent bank statements or EMI receipts
Step 4: Pay Conversion or Processing Fee (if applicable)
Banks may charge a nominal conversion fee (0.25% to 0.50% of the outstanding loan) to reduce the rate or shift to a repo-linked plan.
Step 5: Get New EMI Statement
Once the rate is revised:
- Bank will share a new amortization schedule
- You will receive updated EMI amount and tenure, if changed
- Keep a copy for records
💡 Bonus Tip: Use Balance Transfer to Reduce EMI
If your lender isn’t passing on rate benefits:
- Consider a home loan balance transfer to another bank offering lower repo-linked rates.
- It may help you save significantly on EMIs.
- Use an EMI calculator to compare options before switching.
📝 Example:
Loan Amount: ₹40 Lakhs
Old Rate: 9.0% → New Rate: 8.0%
Tenure: 20 years
Old EMI: ₹35,992
New EMI: ₹33,458
Savings: ₹2,534/month or ₹6+ lakhs over full tenure
📞 Useful Contact Methods
- Customer care number
- Internet banking portal (check “Loan Services”)
- Mobile banking app
- Visit your branch in person
Borrower Action Checklist
For New Borrowers:
- Go for repo-linked loans (RLLR/EBLR).
- Compare rates across lenders.
- Use a loan calculator to project your EMI after cuts.
For Existing Borrowers:
- If linked, check for auto-updates post-June 6.
- Consider refinancing into a repo-linked scheme.
- If on MCLR, the next reset window (quarterly) will reflect changes.
Why This Date Matters
The June 6, 2025 repo rate cut was a significant move—50 bps down to 5.50 %—and is the latest update in RBI’s policy for this year . Borrowers linked to external benchmarks started feeling relief almost immediately as banks adjusted rates within days.
FAQs
A. Home loans linked to external benchmarks (RLLR/EBLR) directly drop when RBI cuts its repo rate—banks reduce lending rates to reflect lower borrowing costs.
A. Yes, for repo-linked loans. Once banks adjust rates, your EMI usually drops—though you may need to request the lender to pass on the benefit.
A. Public sector banks often update quickly, within days of RBI’s decision. Private lenders may take weeks or align with their own reset cycles.
A. For a ₹50 L home loan over 20 years at ~8.5%, a 100 bps rate cut in 2025 can save roughly ₹3,100–₴3,200 per month—total savings up to ₹1.5 L.
A. You can opt to lower your EMI or keep EMI constant to reduce the tenure. Both reduce interest cost, but shorter tenures save more overall.
A. Not immediately. MCLR-based loans adjust based on a bank’s internal costs; repo-linked loans pass on RBI cuts faster.
A. Yes. Refinancing to a lender offering lower repo-linked rates can yield significant savings—just calculate processing cost versus interest saved.
A. Absolutely. Fresh loans sanctioned post-cut benefit from lower interest rates and reduced EMIs.
A. Yes. Public banks generally pass repo cuts faster, while private banks may delay or pass selectively.
A. RBI shifted to a “neutral” stance in June 2025, so further cuts depend on inflation and economic growth data.
Conclusion
The rbi repo rate cut home loan tie-in is especially clear with the June 6, 2025 cut. With fresh rate drops passed on by lenders, borrowers can enjoy lower EMIs and better loan affordability. But the extent you benefit depends on your loan’s rate linkage. Stay alert, use loan calculators, and plan to maximize your savings.