• Source:JND
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The Reserve Bank of India (RBI) has slashed the repo rate by 50 basis points for the third time this year, which is a huge relief for borrowers. By doing this, the central bank has lowered the repo rate by 100 basis points overall in 2025. It is anticipated that this action will lower borrowing costs, particularly for those who take out home loans. This benefit will probably be passed on by banks, making home loan EMIs much more affordable. Here are some immediate financial effects of this rate cut, ranging from monthly savings to long-term interest reduction.

A home loan interest rate reduction from 8.5% to 7.5% could result in significant savings across a range of loan sizes, per a calculation conducted by BankBazaar.com for Jagran Business(jagran.com). For loan amounts of Rs 25 lakh, Rs 50 lakh, and Rs 1 crore, the example assumes a 20-year term.

25 Lakh Loan

The EMI for a loan of Rs 25 lakh over 20 years, with an interest rate of 8.5%, is Rs 21,695.58 per month. If the interest rate falls to 7.5% following the 100 basis point rate cut, the EMI will only be Rs 20,139.83, saving Rs 1,555.75 a month.
Throughout the loan, the total interest savings came to Rs 3,73,380.

Rs 50 lakh Loan

The EMI at 8.5% for a loan of Rs 50 lakh over the same period is Rs 43,391.16. Following the cut, it drops to Rs 40,279.66, providing a Rs 3,111.50 monthly relief. Interest saved in total- Rs 7,46,760.48.

A loan of Rs 1 crore

The monthly EMI for a Rs 1 crore home loan at an interest rate of 8.5% is Rs 86,782.32. The borrower will save Rs 6,223 a month if the rate falls to 7.5%, which would reduce the EMI to Rs 80,559.32. The total amount of interest saved was Rs 14,93,520.96.

The fact that this is the third repo rate cut of the year sends a clear message to both lenders and borrowers. Both homebuyers and the real estate industry stand to gain if banks match the repo rate cut with their lending rates, which could lead to a spike in demand for housing.