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The RBI has cut the repo rate again, bringing it to 5.25% after a 25 basis point reduction. This year's total cut is 1.25%. Let's see how this affects consumers and loan holders.

The repo rate is the interest banks pay to borrow from the RBI. Simply put: *RBI is the main bank for all banks. *Bank = Customer. *Repo Rate = Interest on RBI's loan.

When the economy slows, a rate cut reduces borrowing costs for banks, lowers interest on loans, boosts loan demand, increases industrial investment, and speeds up job creation.

Home loans will get cheaper. Since home loans are long-term, rate changes have a bigger impact. If the repo rate decreases: * EMI goes down * Loan tenure shortens * Overall interest burden is reduced.

On a Rs 10 lakh loan for 15 years, a 0.25% rate cut (9% to 8.75%) saves Rs 150-Rs 250/month. If banks pass on a 0.75% cut (9% to 8.25%), you could save Rs 500-Rs 650/month.

Home loans benefit most, especially floating-rate ones. Fixed-rate personal loans aren't affected, but new loans will be cheaper. MSME loans on floating rates also see benefits.

A repo rate cut doesn't just lower EMIs; it can also reduce interest on FDs and RDs. It's a good time to take out cheaper home loans. Your key benefit is lower EMIs and interest.