New Delhi: In a move that could bring relief to loan borrowers, the Reserve Bank of India (RBI) on Friday reduced the repo rate by 25 basis points from 5.5 per cent to 5.25 per cent. This signals banks to cut their lending rates, particularly on long-term loans like home loans. Since home loan interest rates may be linked to the base rate, MCLR (Marginal Cost of Lending Rate), or EBLR (External Benchmark Lending Rate), the most immediate benefit is likely for those whose loans are tied to the external benchmark, which directly follows changes in the repo rate.

While MCLR-linked loans are also expected to move in line with repo rate changes, the adjustments are not always equal. So, even if the RBI cuts the repo rate by 25 basis points, your loan rate may reduce by only around 10 basis po

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