In its April 2026 meeting of the Monetary Policy Committee (MPC), the Reserve Bank of India (RBI) decided to maintain its policy repo rate at 5.25%, indicating the end of the rate-cut cycle that started in 2025. Although there is no immediate cut in EMIs on home loans, borrowers continue to reap the benefits of previous rate cuts.
In fact, as a result of the combined impact of 125 bps repo rate reductions in 2025, home loan borrowers can save anything between ₹7 lakh and ₹14 lakh on interest during the entire tenure of their loans.
While making this decision, the RBI considered the ongoing global uncertainties and inflationary conditions, especially arising from increased crude oil prices and instability in West Asia.
Reasons Behind RBI’s Decision
The RBI is adopting a conservative stance in light of inflationary risks. Geopolitical tensions in the global oil market have pushed prices higher, while India, being an important oil importer, has been affected.
By keeping the repo rate unchanged at 5.25%, RBI hopes to achieve equilibrium in inflation control and economic growth. Some experts feel that RBI’s current policy stance is ‘wait and see’ in order to study the impact of previous rate cuts.
According to market experts, this does not indicate the end of the rate-cutting trend.
Rather, this could be the approach chosen by the RBI in studying changes in inflation rates and the state of the world economy before choosing their monetary policy stance in the future.
This is good news for the borrowers as the payment of the EMIs remains unchanged both ways.
Benefit Being Enjoyed By Borrowers
Even though no new measure has been introduced as a result of the latest monetary policy move by the central bank, several achievements can already be observed based on the earlier measures taken regarding rate cuts.
For example, if we take into account the case of a person who wishes to apply for a housing loan worth ₹50 lakhs repayable over 20 years, then it can be stated that the decrease in interest rate from around 8.5% to 7.25% brings a difference in EMI of around ₹3,050 each month. This means that he saves interest charges of around ₹7.3 lakhs over his loan life period.
In another instance, a reduction of around ₹5,800 in EMI for home loans worth ₹75 lakhs can be enjoyed by the borrowers along with interest savings of ₹13.9 lakhs during the total loan term.
It can be seen from the above that a slight reduction in interest rates can substantially reduce the overall cost of borrowing money for home buyers.
Effect of Repo Rates on Home Loans
Repo rates are the interest rates charged by the Reserve Bank of India on its lending transactions with other banks. If the RBI reduces the repo rate, lenders will also reduce the interest rate charged on other types of loans, such as home loans.
Currently, most home loans in India have moved to repo lending rates or external benchmark lending rates. It helps home loan borrowers in adjusting interest rates instantly when the RBI adjusts the repo rate.
Consequently, when the RBI reduced rates in 2025, borrowers benefited from repo-linking home loans due to lower interest rates, which directly lowered their EMIs or loan tenure.
Borrowers who have home loans that depend on older benchmarks like MCLR will not observe the same benefit as repo-linked home loans since these rates will take some time to adjust.
Do Borrowers Need To Change Loans?
The suggestion from financial experts is that people who are still using the old loan benchmarks should consider changing to repo-linked home loans.
This will enable them to benefit in the future when the RBI implements further rate cuts. This will also help those whose interest rates are considerably higher than the prevailing market interest rates through refinancing.
The option of balance transfers will also enable them to pay fewer EMIs and reduce the total interest payment. Making partial prepayments when possible would also go a long way in helping to reduce the burden of the loan significantly.
Interest Stability Boosts Buyer Confidence
Though there was an expectation by some borrowers for the RBI to implement a rate cut, there were several positives that emerged after the decision of holding rates steady.
One of these is that there is stability, which helps homebuyers plan better since their EMIs will not be subjected to change. The real estate industry also gets to benefit from stable rates, especially with the reduced borrowing costs.
Over the last year, there has been increased housing demand with interest rates being below 8% at some lending institutions.
What Comes Next?
In the next few months, the actions taken by the RBI will be dictated by the trend in inflation, world energy rates, and economic development.
The central bank may contemplate reducing the rates even further should everything remain under control in the world situation and inflation stay at bay. However, in case of any increase in the pressure of inflation, particularly in connection with higher oil prices, the bank might prefer to hold on to its cautious approach.
At the moment, one thing is clear – the rate cuts made in 2025 by the RBI mean great savings for all borrowers who obtained home loans.
The Bottom Line
As the RBI decided not to change the repo rate, EMI relief will not come anytime soon for borrowers with home loans. Nevertheless, rate cuts earlier in the year will benefit them greatly.
The borrowers are now paying back their debts cheaper because the reduction of the interest rate results in the saving of anywhere between ₹7 lakh and ₹14 lakh, based on loan size and duration.
