If you’re planning to buy a house, there’s good news! The Reserve Bank of India (RBI) has reduced the interest rate again.
On April 9, RBI Governor Sanjay Malhotra announced a 25 basis point cut in the repo rate, bringing it down to 6 percent.
This is the second time in 2025 that the repo rate has been reduced. The first cut happened in February, when it went from 6.50% to 6.25%.
Impact on Home and Car Loans
Experts say that when the RBI lowers the repo rate, banks usually follow by reducing loan interest rates.
This means that people with floating-rate home loans may see a drop in their EMIs (monthly payments). New homebuyers can also benefit by getting loans at lower interest rates.
Car buyers are in for a treat too. Lower loan rates mean smaller EMIs, making it easier to afford a better vehicle. For example, current home loan interest rates range from 8.10% to 9.5%, and these are expected to drop after the April 9 announcement.
RBI’s Monetary Policy Update
Governor Sanjay Malhotra shared the latest monetary policy on April 9 at 10 am. The Monetary Policy Committee (MPC), after a three-day meeting, decided to cut the repo rate by 0.25%. This policy marks the first for the financial year 2025-26 and the second for the calendar year 2025.
What Should You Do Now?
If you’re thinking about taking a home or car loan, this is a great time. With two repo rate cuts this year, banks are likely to reduce interest rates soon.
However, the change may take a few weeks. So, it’s wise to wait a bit before finalizing your loan and then try to negotiate better terms with your bank.
How Much Can You Save?
Let’s understand the benefit with an example:
Suppose you took a Rs 50 lakh home loan for 20 years at an interest rate of 8.5%.
Your monthly EMI would be Rs 43,391, and you would pay Rs 54.14 lakh as interest over 20 years.
After the 25 basis point cut, your interest would reduce to Rs 48.9 lakh.
That’s a saving of Rs 5.24 lakh!
If you prefer to keep the EMI the same, your loan tenure could reduce by around 12 months.
