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In the RBI’s Monetary Policy Committee (MPC) meeting held between February 05 to February 07, 2025, the members unanimously decided to cut its Repo Rate (benchmark lending rate) by 25 basis points to 6.25 per cent from 6.50 per cent.
RBI cut repo rate by 25 bps.
SBI Home Loan: After the Reserve Bank of India (RBI) cut its benchmark repo rate, there are expectations that Indian banks will soon follow the lead to cut their lending rates on loans, making EMIs cheaper for customers.
As anticipated, the State Bank of India (SBI) cut its External Benchmark-based Lending Rate (EBLR) and Repo Linked Lending Rate (RLLR) on various loans.
The decision will directly benefit SBI customers who have taken loans linked to EBLR and RLLR. The EMIs (Equated Monthly Installment) will become lower on these loans.
SBI, however, kept the marginal cost-based lending rates (MCLR), Base rate, and Benchmark Prime Lending Rate (BPLR) unchanged.
In the RBI’s Monetary Policy Committee (MPC) meeting held between February 05 to February 07, 2025, the members unanimously decided to cut its Repo Rate (benchmark lending rate) by 25 basis points to 6.25 per cent from 6.50 per cent. The reduction in the repo rate came for the first time in nearly five years as RBI had constantly hiked the repo rate around 250 bps post Covid-19 pandemic.
What Are EBLR And RLLR?
Banks use the External Benchmark Lending Rate or EBLR to fix interest rates for various loans including home loans.
The reduction in EBLR by 25 bps from 9.15 per cent to 8.90 per cent will make home loans cheaper for customers.
SBI opted for repo rate as the external benchmark to link its floating rate home loans from October 01, 2019.
Moreover, SBI also cut RLLR by 25 bps from 8.75 per cent to 8.50 per cent. A decrease in RLLR translates to lower borrower costs for customers with loans linked to RLLR, such as home loans and business loans.
How Will It Impact Loan Borrowers?
Interest rates on floating-rate loans associated with EBLR or RLLR will drop, resulting in shorter repayment terms or cheaper EMIs.
Before selecting a loan, new borrowers should evaluate lending rates offered by several banks because changes to interest rates have a direct effect on affordability.
After the RBI repo rate cut, lending rates started to decline, so borrowers should check their loan contracts and, if necessary, look into refinancing options. monitoring external variables and repo rate changes.
