125 Basis Points in Four Cuts
The Reserve Bank of India cut the repo rate at four consecutive MPC meetings between February and December 2025. The cumulative reduction: 125 basis points, from 6.50% to 5.25% in under a year. For home loan borrowers on EBLR-linked floating-rate products, this was the largest cycle of EMI reductions since 2019.
At the April 8, 2026 MPC meeting, the rate was held at 5.25% for the second consecutive time. RBI Governor Sanjay Malhotra cited crude oil above USD 100 per barrel and the ongoing West Asia conflict as reasons for the pause. The 2025 savings are real and substantial. For many borrowers, they have not yet fully appeared in the monthly bank statement.
Quick check: If you took a home loan before February 2025 at a rate around 8.50%, your current rate should be approximately 7.25%–7.50%. If it is still showing 8.00% or above, the full benefit has not reached the account. Jump to Why Your EMI Has Not Changed for the exact steps to fix this.
The 2025 Rate-Cut Timeline
Four MPC meetings. Four cuts. Each reduction flowed through to EBLR-linked home loans at the next quarterly reset:
| MPC Meeting | Decision | Repo Rate After | Cumulative Cut |
|---|---|---|---|
| February 7, 2025 | Cut 25 bps | 6.25% | –25 bps |
| April 9, 2025 | Cut 25 bps | 6.00% | –50 bps |
| June 6, 2025 | Cut 50 bps | 5.50% | –100 bps |
| December 5, 2025 | Cut 25 bps | 5.25% | –125 bps |
| February 6, 2026 | Hold | 5.25% | No change |
| April 8, 2026 | Hold | 5.25% | No change |
The June 2025 move of 50 basis points was the largest single cut since the COVID-era emergency reductions of 2020. After December, the RBI shifted to a neutral stance. The next MPC meeting is June 3 to 5, 2026.
Real Example: Meera's Home Loan in Bengaluru
Meera, 34, took a Rs.50 lakh, 20-year home loan from SBI in early 2024 at 8.50%, the prevailing rate before the 2025 cuts began. Her original EMI: Rs.43,391 per month.
After the 125 bps cumulative cuts, SBI's EBLR moved from 9.15% to 7.90%. Meera's rate dropped from 8.50% to approximately 7.25%. New EMI: Rs.39,519 per month.
Meera saves ₹3,872 per month. Over the remaining 18 years of her loan, that compounds into approximately ₹7.34 lakh in total interest saved, without any prepayment or doing anything except benefiting from the rate-cut cycle. On a ₹75 lakh loan, the same calculation yields a monthly saving of approximately ₹5,800 and total savings of ₹13.94 lakh. Use Yieldora's Home Loan EMI Calculator to run your own exact numbers.
EBLR vs MCLR: Why Your Loan Type Determines Everything
The 2025 cuts did not benefit all borrowers equally. The speed of EMI adjustment depends entirely on which benchmark the loan is linked to.
EBLR: External Benchmark Lending Rate
Since October 2019, the RBI mandated that all new floating-rate retail home loans from banks must be linked to an external benchmark, for most banks the repo rate directly. Your rate is: Repo Rate + Bank Spread. As of April 2026, SBI's EBLR formula is: 5.25% + 2.65% = 7.90%. Your final rate sits above this floor based on your CIBIL score. Banks must reset EBLR-linked loans at least every three months. When the repo rate fell by 125 bps, every EBLR borrower got the full benefit within 90 days of each cut.
MCLR: Marginal Cost of Funds Based Lending Rate
Loans from April 2016 to October 2019 are typically on MCLR. It is an internal bank benchmark based on the bank's marginal cost of funds. It does not move one-to-one with the repo rate. The lag between an RBI cut and MCLR reduction is typically 6 to 12 months. The EMI on an MCLR loan changes only at the annual reset date specified in the sanction letter, not when the MCLR itself moves. An MCLR borrower whose annual reset has not yet arrived since the 2025 cuts has received zero benefit.
How to switch from MCLR to EBLR: Contact your bank and ask to convert your loan to an EBLR-linked product. Most banks charge a one-time conversion fee of approximately ₹5,000 plus GST. Per RBI Pre-payment Charges Directions 2025, there are no penalties for switching. If your remaining tenure is more than 10 years, the interest saving from the switch will almost always exceed the conversion fee within the first year itself.
Why Your EMI Has Not Changed, and What to Do Now
For EBLR-linked loans taken after October 2019 where the EMI has not dropped meaningfully since early 2025, three things are likely responsible:
- Your bank has not completed the quarterly reset yet. EBLR resets happen every 90 days. If the last cut was December 2025, your reset may land in March or April 2026. Check your loan account statement for the "rate revision date."
- Your bank reduced the tenure instead of the EMI. When rates fall, banks have the option to either reduce your EMI or reduce your remaining tenure while keeping EMI the same. Many banks default to reducing tenure. The total interest saving is the same, but your monthly cash flow does not improve. If you want the EMI reduced, send a written request to your bank explicitly asking for EMI adjustment rather than tenure shortening.
- You are still on MCLR. Even if your loan was taken after 2019, some borrowers may have refinanced to MCLR products at some point. Check your loan sanction letter — the benchmark rate should be stated clearly.
Three-step action checklist: (1) Pull your latest loan statement and check the current interest rate shown. (2) If it is above 8%, call your bank and ask why the EBLR reset has not been applied. (3) If your loan is on MCLR and your tenure is over 10 years, request a switch to EBLR in writing. The fee is nominal and the saving is substantial.
Will the RBI Cut Again: What to Expect in June 2026
The April 2026 hold was unanimous: all six MPC members voted to keep the rate at 5.25%. The RBI cited crude oil above USD 100 per barrel and the rupee near record lows as the two primary constraints. Both raise import costs and keep inflation elevated. The RBI's FY27 CPI inflation projection is 4.6%, above the 4% medium-term target.
For June 2026, 69 of 71 economists in a Reuters poll forecast no change. A 25 basis point cut in September or December 2026 is possible if crude stabilises below USD 90 and FY27 CPI holds below 4.5%. For borrowers: current rates between 7.25 and 8.50% are among the most competitive in recent years and are likely to hold through at least mid-2026.
What this means practically: If you are planning to take a home loan in 2026, current rates between 7.50% and 8.50% depending on your credit profile are among the most competitive India has seen in recent years. Locking in a long tenure now at these rates, especially with an EBLR-linked product, means future cuts pass through automatically.
Frequently Asked Questions
What is the RBI repo rate in April 2026?
The RBI repo rate is 5.25% as of April 2026. The MPC held the rate unchanged at both the February 6 and April 8, 2026 meetings. The 2025 cut cycle: February (25 bps), April (25 bps), June (50 bps), December (25 bps). Total reduction: 125 basis points from 6.50% to 5.25% between February and December 2025. The rate has been at 5.25% since December 5, 2025.
How much has my home loan EMI dropped because of the RBI rate cuts?
On a Rs.50 lakh, 20-year home loan, the EMI dropped from approximately Rs.43,391 at 8.50% to Rs.39,519 at 7.25%. Monthly saving: Rs.3,872. Total interest saving over 18 remaining years: approximately Rs.7.34 lakh without any prepayment. On a Rs.75 lakh loan at the same rate change: monthly saving approximately Rs.5,800, total saving approximately Rs.13.94 lakh over the remaining tenure. Use the Yieldora Home Loan EMI Calculator for your specific numbers.
Why has my EMI not changed even after RBI rate cuts?
MCLR loans reset only at the annual reset date specified in the original sanction letter, not when the RBI cuts. MCLR is an internal bank benchmark that moves with a lag of 6 to 12 months relative to repo rate changes. An MCLR borrower whose annual reset date has not arrived since the 2025 cuts will have received zero benefit from the full 125 bps reduction. Switching to an EBLR-linked loan (one-time fee approximately Rs.5,000 plus GST) delivers the benefit immediately and applies to all future cuts automatically.
What is the difference between EBLR and MCLR home loans?
EBLR (External Benchmark Lending Rate) is directly tied to the RBI repo rate and resets at least every 90 days by regulation. When the repo falls, the EBLR loan rate falls at the next quarterly reset. MCLR is an internal bank rate based on the bank's own cost of funds, resets at the loan's specific annual anniversary, and moves with a significant lag relative to repo changes. An EBLR borrower received all 125 bps of 2025 cuts within 90 days of each MPC decision. An MCLR borrower whose reset dates did not align has received little or none.
Can I switch my home loan from MCLR to EBLR in 2026?
Yes. Submit a written request to the bank's home loan department asking to convert to an EBLR-linked product. The one-time conversion fee at most banks is approximately Rs.5,000 plus GST. Under RBI Pre-payment Charges Directions 2025, no penalties apply for switching. For any loan with more than 10 years remaining, the interest saving from the lower EBLR rate exceeds the conversion fee within the first year. Processing typically takes 5 to 10 working days.
Will the RBI cut rates again in 2026?
The RBI held the rate at 5.25% at both the February and April 2026 MPC meetings, citing crude oil above USD 100 per barrel and rupee weakness near record lows as the primary constraints. For June 2026, 69 of 71 economists in a Reuters poll forecast no change. A 25 bps cut in the second half of FY27 (September or December 2026) remains possible if crude stabilises below USD 90 and FY27 CPI comes below 4.5%. The RBI's own FY27 inflation projection is 4.6%, above its 4% medium-term target, which is the primary reason for the current pause.