The Reserve Bank of India (RBI) on Friday reduced the repo rate by 50 basis points, bringing it down to 5.5%, and shifted its policy stance from ‘accommodative’ to ‘neutral’. This move, announced following the Monetary Policy Committee’s meeting in Mumbai, signals a mixed bag for both borrowers and savers. RBI Governor Sanjay Malhotra explained that the decision aims to ease borrowing costs, supported by a favourable inflation outlook.
Experts suggest that the affordable and mid-income housing segments could see a revival in demand following the recent rate cut. Notably, the share of affordable housing sales has dropped sharply—from 38% in 2019 to just 18% in 2024. The RBI’s decision is expected to give this segment a much-needed boost. For borrowers, the impact could be felt fairly quickly. For example, on a ₹1 crore home loan with a 20-year term, the monthly EMI could fall by approximately ₹6,000. Alternatively, borrowers may choose to keep their EMIs unchanged and shorten the loan tenure instead.