RBI Keeps Repo Rate Unchanged at 5.50%, No Relief for Home Loan Borrowers in August

Despite widespread expectations, the Reserve Bank of India (RBI) has kept the repo rate steady at 5.50%, dashing hopes of a reduction in home loan EMIs for borrowers. The announcement was made by RBI Governor Sanjay Malhotra during the monetary policy update held at 10 AM on August 6, 2025.

This move comes after a series of previous rate cuts earlier this year, including a 50 basis points reduction in June, a 25 basis points cut in April, and another cut in February 2025. However, the RBI has chosen to hit the pause button this time, focusing on maintaining economic stability.

No Change in August Leaves Borrowers Disappointed

A repo rate cut usually brings a wave of relief to loan customers, particularly those paying home and car EMIs. Many financial analysts had predicted that the RBI would announce another reduction in the August 2025 monetary policy meeting. But the decision to maintain the current rate has left existing borrowers and potential homebuyers disappointed.

The three-day MPC (Monetary Policy Committee) meeting, which began on August 4, concluded with this announcement, signaling a cautious stance by the central bank amid evolving economic conditions.

Focus Remains on Growth, Not Rate Cuts

During the policy briefing, Governor Sanjay Malhotra emphasized that the central bank's focus remains firmly on sustaining economic growth. While inflation is largely under control, the RBI appears to be waiting for more consistent macroeconomic indicators before making another move on interest rates.

Financial experts believe that the next possible rate cut could be announced in October 2025, depending on economic data and global financial conditions.

How Repo Rate Affects Loan EMIs

The repo rate is the rate at which the RBI lends money to commercial banks. When the RBI lowers the repo rate, banks usually follow by reducing interest rates on various types of loans, including home loans, personal loans, and car loans.

This translates into lower EMIs (Equated Monthly Installments) for borrowers, making it more affordable for individuals to finance homes, vehicles, or other needs through credit.

So far in 2025, the RBI has cumulatively reduced the repo rate by 100 basis points, which had brought significant relief to borrowers earlier in the year. However, the decision to keep the rate unchanged in August puts a pause on further savings for now.

Current Home Loan Interest Rates Across Banks

Despite the unchanged repo rate, home loan interest rates have already seen a downward trend over recent months due to previous cuts. Here's a snapshot of current offers:

• Central Bank of India: Offers one of the lowest home loan rates at 7.35%

• Bank of Baroda: Home loan interest starts at 7.45%

• State Bank of India (SBI): India’s largest public lender, offers loans at 7.5%

Most banks have brought their rates below the 8% mark, which is significantly lower compared to last year.

What Borrowers Should Expect Next

With no change in rates this time, borrowers looking to purchase property or refinance existing loans may have to wait longer for further EMI relief. Market experts suggest that if economic indicators remain favorable, the October 2025 MPC meeting could bring better news.