RBI Repo Rate Cut: Why Your Home Loan May Get Cheaper And What It Means For Real Estate? Experts Decode

In a bold and unexpected move, the Reserve Bank of India (RBI) slashed the repo rate by 50 basis points to 5.5% and cut the Cash Reserve Ratio (CRR) by 100 basis points to 3%. For homebuyers, this means one thing above all—cheaper home loans.

The cut in repo rate, the third consecutive reduction this year, directly lowers the cost of borrowing for banks. With banks likely to pass on this benefit, home loan interest rates are set to fall, bringing down EMIs and making homes more affordable for buyers across segments.

Lower EMIs, Higher Affordability

The biggest takeaway for homebuyers is that their monthly home loan EMIs are likely to fall. Anuj Puri, Chairman of ANAROCK Group, noted that the move “effectively lowers the cost of borrowing, making home loan EMIs easier on the pocket and thereby directly improving affordability for buyers.”

He added that this could potentially boost demand in the affordable and mid-income housing segments, which were hit hardest during the pandemic.

Also Read: How Is RBI’s 'Aggressive' Rate Cut Driving Strong GDP Growth?

Developers Also Set to Benefit

The CRR cut will inject more liquidity into the banking system, which means banks will have more funds to lend to both buyers and developers. This is expected to ease access to capital and support faster project completions. “Developers will be able to access more capital for their projects, and this can positively impact project completion timelines,” Puri added.

Mr. Pradeep Aggarwal, Chairman of Signature Global (India) Ltd., echoed this sentiment, saying, “The reduction in CRR is expected to infuse significant liquidity in the banking system, which will prompt banks to lend even more.”

Positive Sentiment Across the Sector

Jash Panchamia, Executive Director at Jaypee Infratech Ltd., said the RBI’s move is aimed at “fueling consumption and accelerating investment.” He emphasized that “lower lending rates will further boost demand for real estate,” especially at a time when several banks are already offering sub-8% home loans.

Mr. Ashok Kapur, Chairman of Krishna Group and Krisumi Corporation, called it a “strong and timely measure” to support real estate. He believes the dual rate cuts will “encourage homebuyers to make property investment decisions” and create a ripple effect across housing segments in the coming months.

"RBI's decision to reduce the repo rate by 50 bps will add new vigour to the country's real estate sector. With this the total quantum of reduction, since the beginning of this year, reaches 100 bps, translating into a massive 1% decrease," said Manoj Gaur, CMD, Gaurs Group. 

A Timely Push for Affordable Housing

While the premium housing market has seen strong momentum, experts believe this rate cut will especially benefit the affordable housing space. ANAROCK data shows that affordable housing’s share in total sales has dropped significantly—from 38% in 2019 to just 18% in 2024.

However, a recent 19% dip in unsold stock indicates end-user demand is still present and can be reignited through lower EMIs.