Mr. Raoul Kapoor, Co-CEO, Andromeda Sales and Distribution Pvt Ltd
The Reserve Bank of India’s decision to cut the repo rate by 25 basis points for the second consecutive time—bringing the total cut to 50 basis points—comes as a welcome move for borrowers and the real estate sector alike. This back-to-back reduction is not only a sign of improving macroeconomic stability but also a strategic push to boost consumption and home ownership.
Lowering the repo rate effectively brings down cost of capital for banks and housing finance companies, translating into cheaper home loans for borrowers. This makes home ownership more affordable, especially for first-time buyers and middle-class households.
Let’s understand the real impact of this 50 bps rate cut:
For a 20-year home loan, assuming the original interest rate was 9%, a 0.5% (50 bps) reduction to 8.5% will bring significant EMI savings:
These savings are not just financial but psychological too—they increase loan eligibility and reduce the long-term cost of home ownership. As interest rates soften, we expect more fence-sitting homebuyers to move forward with purchase decisions, particularly in the mid and premium housing segments.