RBI Cuts Repo Rate to 5.25%: From SBI to HDFC, Check Your New Home Loan Rates
The wait is over for millions of homebuyers. In a decisive move to stimulate the housing market, the Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points (bps), bringing it down to 5.25%.
This marks the most aggressive easing cycle since 2020, with a cumulative reduction of 125 bps in the calendar year 2025. While the central bank hasn't issued a direct order, the signal to lenders like SBI, HDFC Bank, and ICICI Bank is clear: pass on the benefit to borrowers immediately.
But will your EMI drop tomorrow? It depends entirely on the "alphabet soup" of your loan agreement—EBLR vs. MCLR. In this deep dive, we decode the math and the timeline for your savings.
📉 The Rate Cut: Key Highlights
- New Repo Rate: 5.25% (Previous: 5.50%)
- Impact: Immediate EMI reduction for EBLR-linked loans.
- Savings: Approx. ₹1.92 Lakh in interest on a ₹50 Lakh loan.
- First Mover: Bank of Baroda has already cut its benchmark rate to 7.90%.
1. EBLR vs. MCLR: Who Wins?
Not all home loans are created equal. The speed at which you see lower EMIs depends on your benchmark.
The Winner: External Benchmark (EBLR)
Most loans sanctioned after October 2019 are linked to the External Benchmark Lending Rate (EBLR), which tracks the repo rate directly. For these borrowers, the transmission is swift—often within a single billing cycle or at the next 3-month reset.
The Laggard: MCLR & Base Rate
If your loan is linked to the Marginal Cost of Funds Based Lending Rate (MCLR), you might have to wait. Banks calculate MCLR based on their internal cost of funds, which reacts slowly to RBI cuts. Experts warn that MCLR borrowers may only see a partial transmission (e.g., 10 bps cut for a 25 bps repo cut) and only on their specific "reset date".
2. Current Home Loan Rates (Dec 2025)
Leading banks are already adjusting their offers. While HDFC and SBI are hovering near the 7.50% - 7.90% mark, new rates effective from December 6, 2025, are expected to be even more competitive.
| Bank | Interest Rate Range | Benchmark Details |
|---|---|---|
| SBI | 7.50% – 8.70% | Linked to EBLR (Repo + Spread) |
| HDFC Bank | 7.90% – 13.20% | Policy repo rate linked |
| ICICI Bank | 8.75% – 9.80% | Repo-linked benchmark |
| Bank of Baroda | 7.90% onwards | Cut BRLLR by 25 bps effective Dec 6 |
| Union Bank | 7.35% – 10.00% | Aggressive pricing for high credit scores |
3. The Math: How Much Will You Save?
Let’s run the numbers. On a typical ₹50 Lakh home loan with a 20-year tenure, a 25 bps cut can significantly reduce your interest burden.
Scenario: Interest Rate drops from 9.00% to 8.75%
- Old EMI: ₹44,986
- New EMI: ₹44,186
- Monthly Saving: ₹800
- Total Interest Saved: approx. ₹1.92 Lakh over 20 years
Pro Tip: Experts suggest keeping the EMI constant and reducing the tenure instead. This strategy maximizes interest savings.
4. Expert Verdict: "Sentiment Multiplier"
The real estate sector views this as a major catalyst. Anuj Puri, Chairman of ANAROCK Group, calls the rate cut a "distinct sentiment multiplier" that will sweeten the value proposition for homebuyers in the affordable and mid-income segments.
Similarly, Adhil Shetty of BankBazaar notes that while savers might face softer deposit rates, this is a prime phase for households to reassess borrowing decisions, as policy is clearly aligned toward supporting growth.
Final Verdict: What Should You Do?
🛡️ Action Plan for Borrowers
- Check Your Benchmark: If you are still on an MCLR or Base Rate loan, visit your bank immediately and switch to EBLR. The switching fee (usually ₹5,000–₹10,000) pays for itself in savings.
- Negotiate the Spread: Even if you are on EBLR, your bank charges a "Spread" over the repo rate. With new customers getting 7.50%–7.90%, ask your bank to match these rates or threaten to balance transfer.
- Watch for "Reset Dates": If your EBLR reset date is next month, don't panic if your EMI doesn't drop today. It will adjust automatically on the scheduled date.
Disclaimer: Interest rates are subject to periodic revision by banks. Please consult your lender for the exact figures applicable to your credit profile.