What is the repo-linked lending rate (RLLR)?
The repo-linked lending rate, often abbreviated as RLLR, is an interest rate that many banks use to price home loans. It is tied to the central bank’s policy repo rate — the rate at which banks borrow short-term funds from the central bank. When the repo rate moves, RLLR generally follows.
How the repo rate and RLLR move together
If the central bank cuts the repo rate, the RLLR typically comes down too. Conversely, when the repo rate rises, the RLLR tends to increase. That link makes RLLR a floating component of home loan pricing, which means borrowers with RLLR-linked loans see their interest cost change as policy rates change.
What a lender’s RLLR cut means for home loan EMIs
When a bank lowers its RLLR, borrowers with loans linked to that rate can expect their equated monthly installments (EMIs) to fall. The reduction in EMIs depends on the size of the rate cut and the outstanding loan balance. Lenders normally communicate the effective date and the expected change in EMI or tenure to affected customers.
What borrowers should do now
- Check your loan type: Confirm whether your home loan is linked to RLLR or a fixed rate.
- Review bank communication: Look for the official notice from your lender explaining the new RLLR and how it affects your EMI or loan tenure.
- Decide how to use the savings: You can lower your EMI, maintain the same EMI and shorten the loan tenure, or make occasional prepayments.
- Compare options: If you’re unhappy with the pass-through, consider refinancing or negotiating with your lender.
Why this matters
RLLR-linked loans keep home loan costs responsive to monetary policy. For borrowers, that means potential savings when the central bank eases policy and the likelihood of higher payments when policy tightens. Staying informed about rate moves and your loan’s terms helps you manage costs and make better financial choices.