The RBI’s latest decision to cut the repo rate by 0.5% to 5.5% offers some relief to home loan borrowers as it reduces their monthly EMIs. In India, most new home loans are linked to the repo rate through the Repo Linked Lending Rate (RLLR) system. This indicates that reduced interest rates are likely to follow soon.
Piyush Bothra, the Co-Founder and CFO, Square Yards, expresses- “The 50-basis point rate cut, though bold, is expected to reflect the central bank’s acknowledgement of a shifting macroeconomic landscape. With the full-year FY25 GDP growth projected at only 6.5%, the slowest since the pandemic, there is clear evidence of softening momentum. With inflation at a manageable 3%, the RBI had enough headroom to ease policy without triggering price instability. For the real estate sector, which has already been witnessing muted growth, this move is the right dosage required to unleash the animal spirits. A 50-bps reduction will translate into meaningful EMI savings, improving affordability for homebuyers. It will also give developers greater confidence to move ahead with new launches, especially in the low-to-mid segments.”
For instance, a 20-year mortgage on a home could lower your EMI, giving you additional funds each month. Larger loans will lead to even greater savings.
Amit Prakash Singh, the CBO of Urban Money & Co-Founder of Square Yards, says- “The RBI’s decision to cut the repo rate by 50 basis points was on the expected lines and marks a proactive step toward stimulating economic growth. This substantial reduction is expected to significantly ease borrowing costs, reduce EMIs, and increase disposable income — all of which are likely to support domestic consumption and drive demand across various sectors. With inflation well within the RBI’s comfort range, the move reinforces the central bank’s focus on growth. It is poised to have a meaningful impact on the credit landscape, encouraging both consumer and business lending. It signals a timely and growth-oriented policy stance in the face of a moderating economic outlook.”
Canara and UCO banks have lowered their rates to 7.75%. However, some private banks may take a few months to pass on the benefits fully, so be sure to check with your lender. With reduced EMIs, you can allocate the extra funds for daily necessities, save more, or pay off your loan quicker to minimise interest costs. To take full advantage of this, confirm that the rate reduction has been applied to your loan and consider slightly increasing your EMI to shorten the loan term.
Read more through the links below to uncover the key trends and market leaders driving this growth:
NDTV: https://bit.ly/4l01JlP
Zee Business : https://bit.ly/4dQ2YBI
ETRealty Realty: https://bit.ly/43RuFFQ
ABP Live: https://bit.ly/3HxzNap
Nextgen: https://bit.ly/3ZmOrYk
Business News Week: https://bit.ly/3ZWRFBZ
Odisha Business: https://bit.ly/4dYhMyi
Right Column Media: https://bit.ly/4dU0Mcx
Published Date: 6 June, 2025
