RBI Repo Rate Cut 2025: How Bank MCLR, RLLR and RBLR Cuts Can Reduce Your Home Loan EMI

A repo rate cut generally reduces interest on floating-rate home loans, especially those linked to an external benchmark (repo/EBLR), so your effective rate drops at the next reset, and either your EMI comes down, or your tenure shortens. Fixed-rate home loans usually don’t change just because the repo rate changed.

MCLR-linked loans are tied to the bank’s internal cost of funds, so the benefit of a repo cut can be slower and smaller (banks may or may not cut MCLR quickly). Repo-linked (RLLR/RBLR/BRLLR/EBLR) loans are tied to an external benchmark and, as per RBI’s external-benchmark framework, the rate must be reset at least once every 3 months, so repo cuts typically transmit faster (subject to your reset date and the bank’s spread).

For the December 5, 2025 repo rate cut (to 5.25%), banks will pass on the benefit to repo-linked borrowers at their next reset, which, by design, should be no later than the next 3-month reset cycle (many banks also revise their repo-linked benchmark within days). For MCLR-linked borrowers, you’ll typically see it only after the bank cuts MCLR and your loan hits its next reset, which can take longer depending on your reset frequency.

Banks reported to have reduced home-loan benchmarks after this cut include: PNB (RLLR cut effective Dec 6, 2025), Bank of Baroda (BRLLR to 7.90% w.e.f. Dec 6, 2025), Bank of India (RBLR cut effective Dec 5, 2025), Indian Bank (repo-linked benchmark cut effective Dec 6, 2025), and HDFC Bank (MCLR cut). Other lenders may follow or may have made smaller adjustments.

Whether your EMI reduces automatically or your tenure changes instead depends on your bank and your loan’s terms. Many lenders keep the EMI the same and adjust the tenure when rates move, but borrowers can often request a switch (lower EMI vs shorter tenure), subject to the bank’s policy and reset rules.