RBI Keeps Repo Rate Unchanged At 5.25 Per Cent: What It Means For Your Home Loan EMIs

The Reserve Bank of India (RBI) kept the repo rate, the rate at which it lends to commercial banks, unchanged at 5.25 per cent and maintained a ‘neutral’ stance. Sanjay Malhotra, RBI governor, on June 5, said that the decision came on the back of rising geopolitical tension due to the war in West Asia. This is the third consecutive time the repo rate is unchanged, after a cut in the repo rate in the month of December last year. So as of now, the home loan interest rate will remain unchanged.

According to experts, the RBI’s Monetary Policy Committee (MPC) decision to keep the repo rate unchanged is a key anchor for the Indian residential real estate market. The sector is witnessing strong annual growth amid short-term geopolitical shocks, and this rate pause reflects rising consumer pressures and volatile construction environments.

External vulnerabilities have tested the broader macroeconomic environment in early 2026, according to experts. The ongoing war in the Middle East is having direct economic effects, including higher global oil prices and higher domestic construction costs. This sort of supply-side inflation is putting pressure on developers. Second, rising geopolitical uncertainty has led many potential Middle Eastern investors, who tend to put large amounts of money into Indian housing, to pause their buying. Constant borrowing costs mean that the market is not being punished by rising material costs and rising loan rates.

Impact On Home Loan Interest Rate

Says Adhil Shetty, CEO, BankBazaar: “Home loan borrowers on repo-linked products are already seeing the benefit of the 125 basis points delivered since early 2025. On a Rs 50 lakh, 20-year loan, that translates to an Equated Monthly Instalment (EMI) saving of around Rs 3,050 per month and a lifetime interest saving of Rs 7.34 lakh. On a Rs 75 lakh loan, the monthly saving is approximately Rs 5,800, with total interest savings of Rs 13.94 lakh. A rate hold keeps these gains intact. Borrowers still on Marginal Cost of Funds-based Lending Rate (MCLR)-linked products are not seeing this benefit automatically and should switch to a repo-linked loan without delay. Those paying 50 basis points or more above current market rates should explore refinancing now.”

According to experts, the RBI’s decision to maintain the status quo on policy rates comes as a significant relief amid ongoing geopolitical uncertainties, rising crude oil prices, global supply chain disruptions, and broader economic volatility. At a time when inflationary pressures remain a concern and global markets continue to face uncertainty, the RBI’s decision reflects confidence in the stability of the domestic economy while balancing growth and inflation objectives.

Says Anuj Puri, chairman - ANAROCK group: “Since the repo rate remains unchanged at 5.25 per cent, home loan EMIs will remain stable for now. That said, the RBI has warned about the increasing risk of inflation due to the US-Iran war and high crude oil prices. In the future, this could cause rate hikes. This is a good time to lock in the current rates and also consider prepaying a portion of your principal for ongoing floating rate loans, increasing the EMI amount, or considering a balance transfer.”

“For the housing sector, the move is particularly encouraging. The status quo means home loan interest rates are likely to remain stable at around seven per cent to 7.25 per cent, providing much-needed comfort to both existing borrowers and prospective homebuyers. Those currently servicing home loans can continue to benefit from lower EMIs compared to the high-interest-rate environment witnessed during 2022–24, while new borrowers can plan their home purchases with greater confidence and affordability,” says Raoul Kapoor, Co-CEO, Andromeda Sales and Distribution.

Vimal Nadar, national director & head, research, Colliers India, said that despite ongoing global headwinds, RBI has kept the repo rate unchanged at 5.25 per cent. “This will mean stability in home loan interest rates in the near term, which in turn provides a degree of comfort to homebuyers, especially in the price-sensitive affordable and middle-income segments. This becomes crucial since construction costs are already on the rise. Additionally, lingering concerns about the likelihood of a potential rise in repo rate & hence home loan interest rates loom large in the next few quarters,” says Nadar.

What Should Prospective Homebuyers Keep In Mind

Given the stability in home loan interest rates, Nadar explained that prospective homebuyers can evaluate purchase decisions if they are able to get the right product at the right price. “Nevertheless, interest rates are cyclical in nature, and homebuyers should focus more on income visibility, access to financing, etc. Homebuyers must also be fully cognizant of the fact that elevated inflation levels may warrant a hike in repo rate and consequently increase home-loan interest rates in the next few quarters. Thus, EMI-dependent homebuyers must carefully evaluate future income levels and debt servicing ability throughout the prospective home loan tenor,” adds Nadar.

FAQs

1. Will home loan EMIs change after the RBI kept the repo rate unchanged?

For now, EMIs on repo-linked home loans are likely to remain stable as the repo rate stays unchanged at 5.25 per cent.

2. Should borrowers switch from MCLR-linked loans to repo-linked loans?

Borrowers on MCLR-linked loans may not automatically benefit from earlier rate cuts, so they should compare rates and consider switching or refinancing.

3. What should homebuyers keep in mind now?

Homebuyers can evaluate purchases, but they should check income stability, loan affordability, and future EMI capacity, as rates may rise if inflation increases.