The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) has cut the repo rate by 25 basis points to 6.25%. The announcement, made on Friday, marks the first rate cut since May 2020 and comes under the leadership of newly appointed RBI Governor Sanjay Malhotra.
This decision means home loan interest rates will come down, bringing relief to homebuyers.
The repo rate is the rate at which the RBI lends money to commercial banks. When the repo rate is reduced, banks can borrow funds at a lower cost, which often leads to cheaper loans for customers. With this latest cut, home loan EMIs are expected to decrease, making property purchases more affordable.
Lower home loan interest rates will provide much-needed relief to homebuyers, making property purchases more affordable by reducing EMIs. This move is expected to drive demand for housing, boosting market activity and encouraging more people to invest in real estate. It also enhances confidence among both buyers and developers, leading to a stronger and more dynamic sector. Developers will benefit from easier access to funds, helping them complete projects faster and meet the rising demand,” said Manju Yagnik, Vice Chairperson of Nahar Group and Senior Vice President of NAREDCO- Maharashtra.
Before the announcement, analysts were uncertain about whether the RBI would lower the rate or keep it unchanged to manage inflation and maintain currency stability. However, with inflation appearing to be under control and economic growth remaining steady, the central bank decided to lower rates.