RBI’s 50 BPS Repo Rate Cut: What It Means for Your EMI and Fixed Deposit Returns

In a surprise monetary policy move, the Reserve Bank of India (RBI) slashed the repo rate by 50 basis points (BPS), bringing it down to 5.50%. The announcement, made by RBI Governor Sanjay Malhotra following the Monetary Policy Committee’s (MPC) three-day meeting, has sparked significant interest among both home loan borrowers and fixed deposit (FD) investors. This marks the third repo rate cut in 2025, following 25 BPS cuts in February and April, totalling a 100 BPS reduction for the year. The central bank’s decision is aimed at bolstering economic growth while easing financial pressure on consumers.

What This Means for Home Loan Borrowers

For anyone planning to take a new home loan, the latest RBI rate cut brings excellent news and an impact on your EMI.

According to Annuj Goel, MD at Goel Ganga Developments, a borrower with a ₹50 lakh loan over 20 years can expect monthly savings of around ₹1,960, translating to a total saving of nearly ₹4.7 lakh over the loan’s lifetime—provided banks pass on the full benefit.

Aman Gupta, Director at RPS Group, explains that a ₹30 lakh loan for 20 years will now result in a monthly EMI reduction of around ₹1,176. He adds that borrowers can choose to reduce either their monthly payments or the loan tenure, the latter providing more interest savings over time.

Pankaj Mathpal, MD & CEO at Optima Money Managers, notes the cumulative impact: “With a total repo rate cut of 100 BPS in 2025, borrowers with a ₹50 lakh, 20-year home loan could be seeing a monthly EMI relief of ₹3,800 to ₹4,000.” For many prospective homeowners, this creates a favourable environment to move forward with long-pending home-buying decisions.

Impact on Bank Fixed Deposits (FDs)

While the move benefits borrowers, it’s less welcome for FD investors. Banks typically respond to repo rate cuts by lowering interest rates on fixed deposits across various tenures.

Mathpal warns, “Senior citizens and other FD investors should consider locking in current rates now. Existing FDs won’t be impacted by future rate changes, but new deposit rates will likely trend downward.” For those who miss this window, he suggests exploring alternatives, such as post office small savings schemes, which tend to offer stable returns.

RBI’s bold 50 BPS cut is a double-edged sword: it delivers financial relief to homebuyers but creates challenges for risk-averse savers. With a total 1% reduction in 2025 alone, the signal is clear—the time to act, whether buying a home or securing higher FD returns, is now.