RBI’s repo rate cut to benefit home loan borrowers, boost housing demand

In a move aimed at supporting economic growth and easing borrowing costs, the Reserve Bank of India (RBI) has reduced the key policy repo rate by 25 basis points, bringing it down to 6%. The decision was taken by the Monetary Policy Committee (MPC) after a three-day meeting that concluded on April 9.

Also Read: Influencer faces backlash over financial advice on car loans and investments

This marks the second consecutive rate cut by the RBI, following a similar reduction in February. The central bank’s latest action comes against the backdrop of inflation falling below 4% and concerns over slowing economic momentum. With the reduction in the repo rate—the rate at which the RBI lends to commercial banks—borrowing costs are expected to decline across the financial system.

The move is likely to have a direct and favourable impact on home loan borrowers, especially those with floating interest rates linked to the repo rate. As banks adjust their lending rates in line with the RBI’s policy stance, borrowers can expect lower EMIs, thereby improving affordability.

The cut in the repo rate is also expected to provide a boost to housing demand by making credit more accessible and affordable. With both the standing deposit facility (SDF) and marginal standing facility (MSF) rates also adjusted, the overall liquidity environment is set to remain accommodative, reinforcing support for the real estate sector and broader consumption.