Current Repo Rate – What Is the RBI Repo Rate Today and How It Affects Your Home Loan

The repo rate is the single most important lever influencing home loan interest rates in India. Four consecutive cuts have created one of the most favourable borrowing environments in recent years for homebuyers.

This page covers:

• What the repo rate is and how it works
• Current repo rate: 6.50%* as of 5 December 2025
• RBI's latest monetary policy decision and GDP outlook
• How the repo transaction mechanism works
• Impacts of a repo rate cut: 8 effects across the economy
• RBI repo rate history: 2005 to 2025
• How repo rate cuts affect your home loan EMI

The Repo Rate, short for 'Repurchase Agreement Rate', is the interest rate at which the Reserve Bank of India (RBI) lends short-term funds to commercial banks against government securities. It is RBI's primary monetary policy tool for managing liquidity in the economy and controlling inflation.

When the RBI changes the repo rate, it directly affects the cost at which banks and housing finance companies access funds, which in turn influences the lending rates offered to consumers, including home loan borrowers.

As of December 5, 2025, the RBI's Monetary Policy Committee (MPC) reduced the repo rate, bringing it down to 6.50%*, marking the fourth straight cut in recent months. RBI Governor Sanjay Malhotra had earlier revised the inflation outlook for FY 2025-26 to 3.7% (down from the earlier 4% projection), while keeping the projected GDP growth for the year unchanged at 6.5%, citing international tensions and unpredictable weather as risks to economic performance.

The RBI's Monetary Policy Committee assessed inflation trends, liquidity conditions, and the need to support economic momentum before deciding on the rate cut. During the post-meeting briefing, the RBI stated that the cut aims to make borrowing more affordable for consumers and businesses, encouraging higher credit demand, stimulating investment, and supporting overall economic activity.

Alongside the rate cut, the RBI revised its GDP growth projection, reflecting an improved outlook supported by resilient consumption, rising investments, and firming rural demand.

The repo transaction between RBI and commercial banks comprises specific components:

• Financial institutions must provide RBI with eligible securities exceeding the Statutory Liquidity Ratio (SLR) limit to borrow funds
• Loans provided to commercial lenders can be structured as overnight or term agreements
• The applicable repo rate determines the interest charged on the loan amount
• On repayment, financial lenders repurchase the security provided to RBI as collateral
   

When the RBI changes the repo rate, it affects the cost of credit for financial companies, which in turn influences the interest rates these companies offer to the public, including home loan borrowers.

For floating-rate home loans linked to an external benchmark like the repo rate, a cut is typically passed on by lenders within 3 months (per RBI's external benchmark linking guidelines). Depending on how your specific lender applies the reduction, you will see either:

• A lower EMI with your tenure unchanged, or
• A shorter remaining tenure with your EMI unchanged

With four consecutive repo rate cuts, floating-rate home loan borrowers have seen meaningful relief in their borrowing costs. New borrowers also benefit — Bajaj Finance offers home loans from 7.25% p.a.** with amounts up to Rs. 15 Crore* and tenures up to 32 years, reflecting the current favourable rate environment. Check your eligibility today.

The repo rate is the single biggest external factor shaping your home loan cost. With four consecutive cuts in 2025 bringing it to 6.50%*, current market conditions favour both new borrowers and those looking to optimise existing floating-rate loans through a balance transfer. Bajaj Finance offers home loans from 7.25% p.a.** with amounts up to Rs. 15 Crore* and tenures up to 32 years. Check your eligibility today.