Repo Rate Cut Brings Relief for Home Loan Borrowers, Boosts Real Estate Sentiment

In a move welcomed across the real estate and financial sectors, the Reserve Bank of India (RBI) on Wednesday cut the repo rate by 25 basis points in its April 2025 Monetary Policy Committee (MPC) meeting, following a similar reduction in February. The central bank also shifted its monetary policy stance from ‘neutral’ to ‘accommodative,’ signaling the possibility of further easing in the near term.

The rate cut brings the repo rate down, resulting in a direct benefit for home loan borrowers and a boost for the housing sector. Experts noted that the reduction in interest rates will make home loans more affordable, improving buyer sentiment and potentially triggering a fresh wave of housing demand.

“Average housing prices have risen by approximately 50% post-Covid,” said Samir Jasuja, Founder and CEO of PropEquity. “At this juncture, the two consecutive cuts in repo rate will provide a cushion to home loan borrowers as EMIs will come down. Fence-sitters will be encouraged to make housing purchases. Developers will also benefit from reduced borrowing costs, enabling them to expand and launch new projects.”

Industry leaders see the move as a strategic signal of the RBI’s commitment to economic recovery.

Shraddha Kedia-Agarwal, Director of Transcon Developers, commented, “A rate cut in a controlled inflation environment is a strategic push towards economic revival. It makes home loans more attractive and affordable, especially in high-value markets like Mumbai. This will accelerate decision-making and uplift the premium housing segment.”

Adhil Shetty, CEO of BankBazaar, observed that the latest cut is likely to push home loan rates below the 8% threshold again. “The lowest rates we’re currently seeing are between 8.10% and 8.35%, typically reserved for prime borrowers with credit scores above 750 or refinance cases. Homeowners paying significantly higher rates are advised to explore refinancing options.”

Shetty also urged borrowers with older home loans linked to MCLR or Base Rate to consider switching to repo-linked loans. “Despite six years of repo-linking, only about 50% of floating rate loans with government banks are linked to the repo rate. There’s still a significant interest-saving opportunity for many borrowers,” he added.

Following the RBI’s announcement, lending rates on home, personal, vehicle loans and deposits are expected to drop across the board, making credit more accessible for both individuals and businesses.

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