RBI's 50 BPS Repo Rate Cut: Home Loan EMIs and Tenure Set to Decrease

The Reserve Bank of India's (RBI) sharp 50 basis points (bps) repo rate cut is going to provide relief to home loan borrowers immediately, particularly those who have existing loans, by reducing their cost of interest, experts said on Friday.

This rate cut comes at the right time as India, now the world's fourth-largest economy, is seeing strong growth in the realty sector not just in big cities but also in tier 2 and tier 3 towns.

Shekhar G Patel, Confederation of Real Estate Developers' Associations of India (CREDAI) President, clarified, "Lower lending rates will help increase home loan affordability in interest-sensitive segments such as mid-income and affordable housing categories. Lower EMIs are likely to boost buyers' sentiment and attract first-time buyers into the market.

The repo rate, i.e., the rate at which RBI advances money to commercial banks, generally has an effect on the lending rates charged by banks to customers. Lowering the repo rate tends to encourage banks to decrease their lending rates.

Thus, personal loans, home loans, and business loans might turn out to be cheaper, meaning lower monthly EMI payments—a welcome move for current borrowers as well as for those who are likely to borrow loans.

As per the norms of external benchmark lending, current borrowers will be benefited by the entire 50 bps repo rate reduction.

Amit Bivalkar, the Founder Director of Sapient Finserv, said, "This is larger than anticipated. The RBI was expected to cut the rate by just 25 basis points by most people. This decision is the overall 100 basis points interest rate cut since February 2025. It is to boost the economy by lowering the cost of loans and enhancing liquidity."

With this reduction, home loan borrowers will probably see tangible advantages.

Kanika Singh, India Mortgage Guarantee Corporation (IMGC) Chief Risk Officer, said, "We have already witnessed some of the returns on investment (ROI) gains of the last two rate cuts being passed on to the borrowers. A 50 bps rate cut will lead to a significant reduction in the home loan EMIs, if the transmission happens in real-time and not lagged.