RBI Repo Rate and Your Home Loan: The 2025–26 Rate Cycle Explained
When the Reserve Bank of India changes the repo rate, most floating-rate home loans in India follow within a few months. This guide explains how that transmission works, what the 2025–26 rate cycle has meant for borrowers, and how to respond to a cut or a hike. To work out the exact effect on your own loan, use our repo rate EMI calculator.
The repo rate cycle, 2025–2026
| MPC decision | Action | Repo rate |
|---|---|---|
| Through 2024 | Held | 6.50% |
| 7 Feb 2025 | Cut 0.25 | 6.25% |
| 9 Apr 2025 | Cut 0.25 | 6.00% |
| 6 Jun 2025 | Cut 0.50 | 5.50% |
| Aug and Oct 2025 | Held | 5.50% |
| 5 Dec 2025 | Cut 0.25 | 5.25% |
| Feb, Apr, Jun, Aug 2026 | Held | 5.25% |
| 7 Oct 2026 | Hike 0.25 | 5.50% |
For a borrower on a repo-linked loan, the 2025 cuts lowered the rate by 1.25 points in total; the October 2026 hike gives back 0.25 of that.
How a repo change reaches your loan
| Loan benchmark | Who uses it | How fast it moves |
|---|---|---|
| Repo-linked (EBLR / RLLR) | Most bank home loans since Oct 2019 | At the next reset, at least once every three months |
| MCLR | Older bank loans (2016–2019) | On the six-monthly or annual reset date, and only partly |
| Lender PLR | Many housing finance companies | At the lender’s discretion; often slower |
Your loan rate is the benchmark plus a spread fixed at sanction. If the repo rate moves 0.25 points, a repo-linked loan moves exactly 0.25 points; the spread does not change unless you renegotiate.
What to do when rates are cut
- Check your next reset date and confirm the lower rate has been applied.
- Banks usually keep the EMI and shorten the tenure — that saves the most interest. Ask for a lower EMI only if you need the cash flow.
- If you are on MCLR or an HFC’s PLR, consider switching to a repo-linked loan or transferring the loan; cuts reach those loans slowly.
What to do when rates rise
- Banks often keep your EMI and extend the tenure. That is the costliest option because you pay interest for longer.
- Ask the bank to raise the EMI instead, or make a part-prepayment — floating-rate loans to individuals carry no prepayment charge.
- Check whether your spread is higher than what the bank offers new borrowers; a balance transfer or a spread reset may offset the hike.
Example: what 0.25 points means
On a ₹50 lakh loan over 20 years, a 0.25-point change moves the EMI by roughly ₹750–₹800 a month. If the bank absorbs a hike by extending the tenure instead, the extra interest over the life of the loan can be more than twice as much as raising the EMI. Run your own numbers in the repo rate EMI calculator.
Frequently asked questions
What is the repo rate now?
5.50%, after the RBI’s 0.25-point hike on 7 October 2026.
When will my home loan rate change?
Repo-linked loans change at the next reset, at least once every three months. MCLR-linked loans change only on their reset date.
Should I choose a higher EMI or a longer tenure after a hike?
A higher EMI (or a part-prepayment) is usually cheaper overall, because a longer tenure means paying interest for more years.
Does a rate cut reduce my EMI automatically?
Usually the bank keeps the EMI and shortens the tenure. You can ask for a lower EMI instead.
When is the next RBI policy meeting?
2–4 December 2026.
Related
- Repo rate EMI calculator
- Home loan balance transfer
- Home loan prepayment strategy
- Home loan interest rates
Last verified: October 2026, against RBI monetary policy statements. General information, not financial advice.
