RBI rate cut: Check how much you can save on home and auto loan EMIs with 5.5% repo rate

The Reserve Bank of India (RBI) reduced the repo rate by 50 basis points to 5.5% on Friday, marking the third consecutive rate cut this year. This cut was larger than the market’s expectation of a 25 basis point reduction. So far in 2025, the RBI has lowered the repo rate by a total of 100 basis points.

In addition, the RBI cut the cash reserve ratio (CRR) by 100 basis points, bringing it down from 4% to 3%. This move is expected to release approximately ₹2.5 lakh crore of liquidity into the financial system, stimulating economic activity and credit flow

As a result, rate-sensitive sectors such as NIFTY Bank, NIFTY Realty, and NIFTY Auto saw strong investor interest, rising between 2% and 3%.

Experts say the RBI’s latest measures will benefit borrowers across India, including those with home loans, car loans, MSME loans, and other retail floating-rate loans, as banks are likely to reduce interest rates.

Retail floating-rate loans issued after October 2019 are linked to external benchmarks, usually the repo rate, which means that EMIs adjust according to changes in the repo rate. Domestic banks typically pass on these rate cuts to borrowers either fully or partially, depending on their interest reset cycle, which generally occurs within 3 to 6 months.

Homebuyers across India who are eligible for floating interest rate home loans may see their interest rates going down by up to 50 basis points, in line with the RBI’s announcement.

Here is how much you can save each year on home loans of ₹20 lakh, ₹30 lakh and ₹50 lakh, assuming that the tenure is 20 years and the average median interest rate of 8.25% (before today’s repo rate cut).

How much you will save on home loan EMIs

How much you will save on auto loan EMIs

The repo rate cut is also likely to benefit those who have taken a car or a two-wheeler loan, which also falls under the retail loan category. Auto loan borrowers likely to see their interest rates going down by 25 basis points (0.25%), provided that the bank passes on the full benefit to them.

Here is how much auto loan borrowers can save on loans of ₹5 lakh, ₹7 lakh, and ₹10 lakh, given that the tenure is five years and an average median interest rate of 9.1% per annum (before the repo rate cut).

RBI decision to go for larger-than-expected reduction aims to support economic growth amid slowing inflation rate and global uncertainties. By lowering borrowing costs, RBI intends to boost demand, encourage investment, and ease EMI burden on businesses and consumers.