Home Loan EMI to Get Cheaper: Bank of India Cuts Interest Rates After RBI Repo Rate Reduction
The relief that home loan borrowers were waiting for has finally arrived. Following the Reserve Bank of India’s (RBI) recent decision to cut the repo rate from 5.50% to 5.25%, major banks have begun passing on the benefit to customers. Bank of India has reduced its Repo Based Lending Rate (RBLR) by 25 basis points, making loans cheaper for millions of borrowers.
The bank announced that the new rates came into effect on December 5, 2025. Previously, the RBLR was 8.35%, which has now been reduced to 8.10%. The bank confirmed that this rate change is directly aligned with the RBI’s monetary policy adjustments.
What This Means for Borrowers
With the reduction in RBLR, customers with home loans, car loans, or MSME loans linked to the repo rate will now experience a decrease in monthly EMIs or a shorter loan repayment period. A lower interest rate means lower interest burden over the loan tenure, offering significant financial relief.
Home loan EMI schedules could see visible improvement, especially for long-term borrowers whose monthly budgets were strained by increasing rates over the past few years.
Other Banks Also Join the Rate Cut Move
Indian Bank has also reduced its interest rates, following RBI’s policy announcement. The bank cut its Repo Linked Benchmark Lending Rate (RBLR) from 8.20% to 7.95%, effective December 6, 2025. This step is expected to benefit thousands of loan customers across the country.
In addition to the RBLR reduction, Indian Bank also lowered its 1-year MCLR by 5 basis points, making its loan offerings even more affordable. Borrowers with MCLR-linked loans will receive an immediate benefit from lower EMIs.
Impact on the Housing Market and Borrower Sentiment
Industry experts believe that the RBI’s rate cut, followed by reductions made by banks, will boost the demand for home purchases. Lower EMIs encourage more people to apply for housing loans, ultimately strengthening the real estate sector. Developers also expect increased sales momentum.
With banks becoming more competitive, more lenders are likely to reduce rates in the coming days, increasing customer choice and driving market activity.
Key Rate Changes At a Glance
| Category | Previous Rate | New Rate |
|---|---|---|
| RBI Repo Rate | 5.50% | 5.25% |
| Bank of India RBLR | 8.35% | 8.10% |
| Indian Bank RBLR | 8.20% | 7.95% |
| Indian Bank 1-Year MCLR | 8.85% | 8.80% |
More Relief Expected for Borrowers
With two major banks announcing reductions, financial experts predict that more banks may follow suit soon. This may help increase loan affordability and support higher demand across home, auto, business, and MSME loan categories.
Borrowers are advised to:
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Review loan statements
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Check benefits applicable on floating-rate loans
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Contact their bank for revised EMI schedules
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Consider balance transfer options if lower rates are available elsewhere
Bottom Line
The recent rate cuts by Bank of India and Indian Bank mark a positive shift for borrowers. Reduced interest rates will make EMIs cheaper, ease financial pressure on families and businesses, and potentially accelerate the growth of India’s housing and credit markets.
