The RBI finally moved. They cut the repo rate by 25 basis points to 5.25% in the December MPC meeting. That happened. And now, the banks are scrambling to pass on the benefit, which is great news for pretty much every borrower out there, or nothing.
This move directly eases the burden on all floating-rate loans—think RLLR, RBLR, and even MCLR-linked loans. Your EMIs are either going to shrink, or you can opt to keep your EMI the same and dramatically shorten your loan tenure.
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The Banking Transmission is Swift
Multiple major banks jumped in right away, showing that the transmission of the rate cut is actually happening pretty fast this time around.
| Bank | Benchmark/Rate Cut | Old Rate | New Rate |
| PNB | Repo Linked Lending Rate (RLLR) | 8.35% | 8.10% |
| Bank of Baroda | Benchmark Retail Loan Lending Rate (BRLLR) | 8.15% | 7.90% |
| Indian Bank | Repo-Linked Lending Rate (RLLR) | 8.20% | 7.95% |
| Bank of India | Repo Based Lending Rate (RBLR) | 8.35% | 8.10% |
| HDFC Bank | MCLR (up to 5 bps cut) | 8.35% to 8.60% | 8.30% to 8.55% |
| Bank of Maharashtra | Home Loan Rate | 7.35% | 7.10% |
| Bank of Maharashtra | Car Loan Rate | 7.70% | 7.45% |
What This Actually Means for Borrowers
The thing is, a small cut like 25 bps seems modest on paper, but over a long home loan tenure, the savings are meaningful.
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For Existing Borrowers: If your loan is linked to an external benchmark (like the Repo Rate), the rate reduction is usually fast. For a ₹50 lakh home loan taken for 20 years, a 25-basis-point drop can translate into a reduction of around ₹775 per month in your EMI.
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The Bigger Gain: If you opt to keep your EMI constant, that extra money goes straight to your principal, which can shave off years from your total loan tenure and lead to savings of several lakhs over the life of the loan.
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New Borrowers: You are getting an even better deal. Bank of Maharashtra, for example, is now offering home loan rates at 7.10% and has completely waived processing fees. That’s a huge reduction in upfront costs, or nothing.
The expectation is that this rate cut—the fourth one this calendar year—will boost credit demand and encourage those “fence-sitters” to finally enter the home-buying market. The market sentiment is strong.
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