In a significant move aimed at invigorating the Indian economy, the Reserve Bank of India (RBI) has announced a 50-basis point reduction in the repo rate, bringing it down to 5.5%. This marks the third consecutive rate cut in 2025, totaling a 100-basis point decrease since the beginning of the year.
Complementing this, the RBI has also declared a phased reduction of the Cash Reserve Ratio (CRR) by 100 basis points, set to be implemented in four tranches starting September 2025. This strategic decision is expected to inject approximately Rs 2.5 lakh crore into the banking system, thereby enhancing liquidity and enabling banks to extend more credit to various sectors, including real estate.
“For the real estate sector, this rate reduction is set to bolster credit lending, accelerate buying velocity, and enhance development momentum. The resulting decline in home loan interest rates will directly benefit homebuyers by improving affordability and cushioning their financial commitments. Lower mortgage rates make home ownership more attainable,” expressed Dr Niranjan Hiranandani, Chairman, NAREDCO & Hiranandani Group.
Manoj Gaur, CMD, Gaurs Group, 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. Not only will it make homeownership affordable and boost buyers’ sentiments but could as well signal the beginning of a new low-interest regime.
Murali Malayappan, Chairman and Managing Director of Shriram Properties Limited shared, “The RBI’s decision to lower the REPO rate by 50 basis points and the CRR by 100 basis points will unlock an additional Rs2.5 lakh crore of liquidity, while the easing of home?loan ates should particularly benefit mid-market homebuyers.”
Domnic Romell, President, CREDAI-MCHI and Director at Romell Group said, "A cumulative rate cut of 50 basis points significantly eases the monthly repayment burden for aspiring homebuyers, especially in the affordable housing category. For instance, a 15–20 lakh home loan now sees a monthly EMI reduction of around Rs 700–1,000—this is a substantial relief for cost-sensitive buyers, particularly those employed in the informal sector. We anticipate this move will activate fence-sitters and revive first-time buyer interest across urban and semi-urban pockets."
The RBI's decision to reduce the repo rate by 50 basis points should translate into lower EMIs for home loan borrowers. Disposable income should increase and thereby scope for increased spending. Concurrently, it lowers the borrowing costs for HFCs and NBFCs. We anticipate a thrust in retail credit off-take, particularly in home financing, as affordability improves,” stated Kalpesh Dave, Director & CEO, Star Housing Finance Limited
Amit Bhagat, Co-Founder, CEO and MD, ASK Property Fund added, “RBI’s announcement of a further rate cut of 50 bps is a significant proactive step at a time when demand for residential real estate is seeing signs of slowing down across segments due to increased prices. Home ownership continues to be an aspiration and dream for every Indian household, and these rate cuts, followed by reduced home loan interest rates, will strengthen home buyer confidence.”
