The Reserve Bank of India’s latest policy move — a 25-basis-point cut in the repo rate from 5.50% to 5.25% — marks the fourth reduction this year and has immediately shifted attention to the housing market, where homebuyers are hoping for lower EMIs once banks realign their lending rates.
During the Monetary Policy Committee’s meeting held on December 3, 4 and 5, all members voted unanimously for the rate cut after analysing inflation patterns, economic growth projections and the liquidity position of the financial system. RBI Governor Sanjay Malhotra emphasised that the decision followed a comprehensive review of macroeconomic conditions. Alongside the repo rate change, the Standing Deposit Facility rate has been revised to 5%, and the Marginal Standing Facility rate as well as the Bank Rate now stand at 5.50%, while the overall policy stance remains neutral.
Beyond the rate cut, the RBI also rolled out liquidity-support measures to ensure smooth functioning of the markets. Malhotra announced that the central bank will conduct Open Market Operation (OMO) purchases totalling ₹1 lakh crore and execute a three-year dollar-rupee buy-sell swap worth USD 5 billion in December. These steps aim to improve durable liquidity and maintain financial stability during the easing cycle.
The big question for consumers now is whether housing loans will get cheaper. According to Anuj Puri, Chairman of ANAROCK Group, the reduction is especially timely for the real estate sector, where property prices across the top seven cities have risen around 10% this year. He said that if banks transmit the rate cut promptly, the affordability of homes in mid-income and budget segments will improve noticeably, potentially triggering a strong rise in housing sales in early 2026. Puri noted that even though the luxury segment will continue to lead, the reduction could bring back buyers who were waiting for better affordability amid rising prices.
Developers echoed this optimism. Rajat Khandelwal, Group CEO of Tribeca Developers, said the move is expected to particularly benefit premium regions such as NCR, MMR and Pune, where rising EMIs have been squeezing affordability. Lower interest rates, he said, improve predictability for homebuyers and help restore confidence in purchase decisions.
However, for developers, the situation comes with mixed implications. Dharmendra Raichura of Ashar Group pointed out that although lower interest rates support home demand, the depreciating rupee has increased the cost of imported construction materials, which puts pressure on margins. At the same time, the weaker rupee makes Indian housing more attractive for buyers earning in foreign currency, potentially giving a fresh boost to NRI-driven sales.
Ramani Sastri of Sterling Developers said the overall real-estate environment remains strongly positioned for growth, with India continuing to be one of the most dynamic housing markets globally. The sentiment was echoed by Mt. K Kapital’s Binitha Dalal, who noted that lower borrowing costs enhance business confidence, encourage capital expenditure and support India’s broader growth trajectory by strengthening both liquidity and market sentiment.
With four repo rate cuts already delivered in 2025, industry expectations are that banks will soon begin transmitting the latest reduction into home loan rates. Since the majority of home loans today are benchmarked externally — and therefore react directly to policy rates — even a modest reduction from lenders could bring noticeable relief to EMI-payers.
For now, buyers will be closely watching banks’ rate revisions to understand how quickly this policy shift turns into meaningful savings on monthly repayments and whether it boosts affordability in the coming months.
