RBI Repo Rate Cut lowers EMI Burden, sights major Relief for Homebuyers

The Reserve Bank of India (RBI), after the Monetary Policy Committee meeting, slashed repo rate by 50 basis points. Followed by the earlier rate cut in February, the latest dip brought the repo rate to 5.50% from 6.50%. 

Sanjay Malhotra, RBI Governor, said inflation margin to balance GDP growth. This third linear cut in the repo rate hints at relief for home loan borrowers. The 100 basic points will inject more liquidity into banks making credit flow leverage easy. As a result, the disposal of home loans has become much easier than ever before.

After May 2020, a massive RBI repo rate cut in February followed by another drop in repo rate back in April 2025. Reserve Bank of India altered its policy from neutral to accommodative in the latest monetary policy meeting.

RBI Repo Rate Cut lowers burden on Home loan Borrowers

The 50 basic point repo rate cut will reflect in low interest rates will diminish duration, thus resulting in lower home loan EMIs. Interestingly, the CPI, the Corresponding inflation rate remains below the target of 4% aimed by the Reserve Bank of India. Recorded at 3.34% in March 2025, the CPI rate slipped to 3.16% in April 2025. 

The 100 basic point deduction in CRR, Cash Reserve Ratio from 4% to 3% will lessen the burden on home loan borrowers. These RBI repo rate cut measures will make interest rate cuts easy for banks.

With the lowering of 50 basic points in February and the 50 basic point cut now, the RBI repo rate cut of 100 basic points in 6 months of 2025 shifts the EMI burden to minimum possibility.

According to the SBI Research report, “CPI inflation may come down to 2.9% in Q1, FY26, as food inflation is expected to be within the target in June quarter. Above normal monsoon prediction by IMD, strong arrival of crops and decline in crude oil prices revising down our CPI estimate to 3.5% in FY26 with downward bias.”

RBI Repo Rate Cut - An Act of Balancing GDP Growth

After surpassing Japan to become the fourth largest economy in the world, the Indian economy exhibits resilience. The GDP growth for the January-March quarter stands firm at 7.4 percent. Reverting to this, Sanjay Malhotra, RBI Governor, said, “Real GDP growth rate for this year 2025-2026, is projected at 6.5%, continuing with our earlier forecast, with Q1 at 6.5%, Q2 at 6.7%, Q3 at 6.6% and Q4 at 6.4%. The risks are evenly balanced.’

RBI Repo Rate Cut to Raises Budget-Friendliness for Home loan Borrowers

The overall 100 basic point cut by the Reserve Bank of India brings major relief for homebuyers. The decision to curtail the repo rate is likely to bring a positive shift to the real estate market. As homebuyers can save a fair amount as home loan EMIs lowers.

In the Monetary Policy Meeting, the RBI repo rate cut decision was passed by a 5:1 majority, a third consecutive cut in the first six months of 2025.