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.
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