Good news for borrowers! The Reserve bank of India (RBI) has announced a cut in the repo rate, which is expected to reduce EMIs on home loans, car loans, and other personal loans.
1. What Is the Repo Rate?
· The repo rate is the rate at which the RBI lends money to commercial banks.
· When the repo rate falls, banks can borrow money at a lower cost, which often leads to cheaper loans for consumers.
· Conversely, a higher repo rate makes loans more expensive.
2. Recent Announcement
· On December 5, 2025, RBI governor Sanjay Malhotra announced the Monetary Policy Committee (MPC) decision.
· The repo rate was reduced by 25 basis points, i.e., 0.25%.
· This move is aimed at boosting borrowing, consumption, and economic growth.
3. Impact on home Loans
· home loan borrowers may see a reduction in their EMIs.
· For example, on a ₹50 lakh loan at 8% interest, a 0.25% rate cut can reduce your monthly EMI by a few thousand rupees depending on tenure.
· Borrowers with floating rate home loans will benefit directly.
4. Impact on car Loans and Personal Loans
· car loans and personal loans with floating interest rates may also see reduced EMIs.
· Lower EMIs mean more disposable income for consumers, which can boost spending.
5. Should You Consider Borrowing Now?
· If you’re planning to buy a house, car, or take a personal loan, now is a good time to compare rates across banks.
· Many banks may pass on the rate cut immediately, offering cheaper EMIs to new borrowers.
Bottom Line
The RBI’s repo rate cut by 25 basis points is a welcome relief for borrowers. It reduces the cost of borrowing and provides financial breathing space for those with floating-rate loans.
Tip: Check with your bank whether your existing loan EMI will decrease automatically or if you need to request a revision.
Disclaimer:
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.
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