RBI MPC puts rate cuts on hold: Should home loan borrowers switch or wait?

The Reserve Bank of India (RBI) has kept the repo rate unchanged at 5.5% in its latest Monetary Policy Committee (MPC) meeting on October 1, 2025, marking the second consecutive pause after a total of 100 basis points in cuts earlier this year.

If you're a home loan borrower—or planning to become one—this pause matters.

Most floating home loans today are linked to the repo rate through the External Benchmark Lending Rate (EBLR). When the RBI cuts the repo rate, your EMI drops or your loan tenure shortens. But with no cut this time, don’t expect relief—yet.

So, is this the end of the rate-cut cycle? Not necessarily.

Inflation is still low by historical standards—2.07% in August, up slightly from July’s 1.61%, but well within the RBI’s 2–4% comfort zone. That gives the central bank room to act if global or domestic conditions worsen. And with GST rate cuts and easing food prices already helping cool inflation, another rate cut can’t be ruled out in the coming months.

However, RBI also flagged risks like volatile global commodity prices and trade disruptions that could keep inflation from falling further.

Meanwhile, the 10-year government bond yield has softened to 6.571%, down from 6.843% in January—often a signal that markets expect more rate action, albeit gradual.

What should home loan borrowers do now?

If your loan is linked to the repo rate (EBLR): You’re in the best position. Future rate cuts will benefit you immediately.

If you’re on MCLR, base rate, or BPLR: Consider switching. These regimes are slower to pass on rate cuts.

If you're a new buyer: Locking in a floating-rate loan now could still be smart, especially if rates fall again.