Will Home Loan EMI Be Reduced in October? Here's What RBI Has Indicated

The Reserve Bank of India (RBI) kept the repo rate unchanged in its latest Monetary Policy Committee (MPC) meeting on August 6, 2025, meaning there is no immediate further reduction in home loan interest rates. However, several factors suggest the possibility of another rate cut—and cheaper EMIs—in the near future.

What Has Happened So Far?

• In 2025, RBI already cut the repo rate by a total of 100 basis points (1%) in the February, April, and June MPC meetings.

• These consecutive cuts have already provided significant relief to home loan borrowers, with EMIs reduced for many people.

Is There a Chance of Further Rate Cuts?

• Inflation is Key: India’s retail inflation rate fell to 2.1% in June 2025, its lowest in a year. When inflation is low, RBI has more flexibility to cut rates.

• Expert Opinions:

  • Economists say if inflation remains under control—helped by a good monsoon and robust crop outlook—there will be more room for RBI to lower rates further.

  • While there was no rate cut in August, experts like VK Vijaykumar and Raul Kapoor believe the trend of rate reductions could continue if current conditions persist.

Market Sentiment and Bond Yields

• Government bond yields, which reflect market expectations on rates, have dropped from 6.843% in January to just over 6.3% now.

• The market is not expecting a drastic rate cut soon, but the full effect of the recent 1% repo cut is yet to be seen in banks’ actual lending rates and consumers’ EMIs.

October: The Key RBI Meeting

• Real estate experts and banks are closely watching the October MPC meeting.

• If economic indicators remain positive and inflation low, there is a strong possibility of a 25 basis point rate cut in October 2025.

• This could happen before the festive season, potentially boosting home buying and making EMIs cheaper for borrowers.

What Should Home Loan Borrowers Expect?

• Even though the repo rate is unchanged as of August, the trend points towards easier lending in the near future.

• The series of rate cuts may not be over. Provided inflation stays low and the economy remains stable, another reduction in home loan rates (and thus EMIs) could be announced in the October policy review.

Summary:
While home loan EMIs haven’t been reduced further in August, signals from the RBI, inflation data, and expert forecasts suggest there is a realistic possibility of a rate cut—and cheaper EMIs—when the RBI meets again in October 2025. Borrowers should stay alert for policy changes that could offer additional financial relief in the coming months.