The big question now: How much of this will actually translate into cheaper home loans and a real boost to housing demand?
Lower repo rate = Cheaper loans, but not for everyone
For borrowers with repo-linked home loans, the relief may be quick and significant. These loans, which adjust directly based on the RBI’s repo rate, will see EMIs fall almost immediately, bringing fresh relief to many urban and mid-income borrowers.
But the benefits won’t reach everyone equally.
“Borrowers with loans taken before 2019 may still be linked to MCLR or older base rate systems. For them, today’s rate cut won’t automatically lower EMIs,” says Adhil Shetty, CEO of BankBazaar.
He adds that refinancing or switching to a repo-linked loan is now more attractive than ever, especially for those paying more than 50 bps above the market’s lowest rate.
With the lowest home loan rates already touching 7.85% for top credit-score borrowers, experts say the sub-8% interest rate mark could become more mainstream — something not seen since early 2022.
A look at home loan rates of some of the banks:
| Banks | Starting Interest Rate (p.a.) |
| Kotak Mahindra Bank | 8.65% p.a. onwards |
| Union Bank of India | 7.85% p.a. onwards |
| Bank of Baroda | 8.00% p.a. to 9.50% p.a. |
| Central Bank of India | 7.85% p.a. onwards |
| Bank of India | 8.40% p.a. onwards |
| State Bank of India | 8.00% p.a. onwards |
| HDFC Home Loans | 8.50% p.a. onwards |
| LIC Housing Finance | 8.00% p.a. onwards |
| Axis Bank | 8.75% p.a. onwards |
(Source: Bankbazaar)
Developers to gain from liquidity, buyers from lower EMIs
The CRR cut is equally significant, freeing up more liquidity for banks to lend.
This means developers may find it easier to access funding, especially for ongoing and affordable housing projects, many of which were delayed due to financing constraints.
“This cut in CRR boosts liquidity in the system, allowing banks to reduce home loan interest rates. It will also help developers access more capital, potentially improving project completion timelines,” said Anuj Puri, Chairman, ANAROCK Group.
He noted that affordable housing, which took the biggest pandemic hit, could benefit the most from these policy moves.
Affordable homes’ share in total housing sales fell from 38% in 2019 to just 18% in 2024, according to ANAROCK data. Yet, a 19% drop in unsold stock hints at steady end-user demand.
A rate cut that makes EMIs cheaper can support a revival.
Mid-segment, plotted, and premium buyers watching closely
Beyond affordable housing, the rate cut is also expected to influence segments such as plotted developments and premium homes, especially in Tier 2 and Tier 3 markets.
“Affordability improves significantly, especially for the aspiring middle class and upwardly mobile buyers,” said Gaurav K Singh, Chairman of Womeki Group.
He believes this will accelerate demand in fast-growing micro-markets where plotted developments offer flexible and aspirational living.
Luxury homebuyers and investors may also return to the market.
“Lower borrowing costs enhance affordability for high-end buyers, including NRIs. With attractive EMIs, demand could pick up in metro cities,” said Mohit Agarwal, Business Head at Conscient Infrastructure.
A neutral stance now, but uncertainty ahead
Despite the aggressive rate cuts, the RBI has shifted its policy stance from ‘accommodative’ to ‘neutral’, signalling that the central bank may pause here.
Future action will likely depend on how inflation and global economic conditions evolve.
Experts say the RBI has done its part for now — the real test lies in how swiftly and fully banks transmit these cuts to borrowers.
“This reduction gives the real estate sector a solid push,” said Parthh K Mehta, CMD of Paradigm Realty, “but seamless transmission by lenders is key to translating this monetary policy into actual home purchases.”
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