RBI Rate Cut: Will Your Home Loan EMI Finally Come Down? Experts Explain

The Reserve Bank of India (RBI) has announced a cut of 25 basis points in the repo rate, which has decreased the rate from 5.5% to 5.25%. This change has raised the hopes again of those homebuyers who are facing the difficulty of paying high EMIs. However, the big question is still around the corner as to whether this repo rate cut would bring down the interest rates of home loans. The opinion of the experts is here.

RBI’s Big Decision: Why the Repo Rate Was Cut

The RBI’s Monetary Policy Committee (MPC) got together on the 3rd, 4th and 5th of December to evaluate India’s economic situation, inflation trends, and liquidity requirements. After analyzing the situation, the committee decided in favor of cutting the repo rate by 25 basis points with a unanimous vote.

RBI Governor Sanjay Malhotra explained:

“After thus thoroughly reviewing the macroeconomic environment, the MPC unanimously decided to lower the policy repo rate to 5.25%. The new rate takes effect immediately.”

This now means that the total repo rate cut for 2025 has been increased to 125 basis points.

Will Home Loan EMIs Become Cheaper?

Homebuyers are now very eager to know if banks will share this advantage with them. If banks lower their lending rates, EMIs could decrease thus providing much-needed financial relief in line with the RBI’s decision.

Positive Boost for the Real Estate Market

Experts from the industry think that this rate cut will have a positive impact and could be a game changer:

Anuj Puri, Chairman, ANAROCK Group

He thinks that the decision has come at a very critical time when real estate prices have been rising in major cities.

"The cut in the repo rate is a very positive sign for the real estate market. It will mostly benefit middle-income homebuyers who are very sensitive to interest rate changes. If banks pass on the rate cut quickly, home loan rates will become even more attractive."

Puri further pointed out that the housing prices in the top seven cities rose by almost 10% in 2025. The rate cut could help the affordability issue and push the sales nearly by the end of 2026.

Rajat Khandelwal, CEO, Tribeca Developers

He recognizes the step as providing “much-needed relief” to home buyers in costly markets like MMR, NCR, and Pune, where the rising EMIs have already impacted the buying power.

“Heavy loan costs would not only release the financial burden but would also hone the buyer’s perspective.”

But What About Developers? The Rupee’s Fall Creates Challenges

The ccost-cutting in case of the interest rates is done in favor of the buyer, developers would enjoy mixed fortunes.

Dharmendra Raichura, VP & Head of Finance, Ashar Group

He mentions that the falling rupee is making the cost of construction materials slightly higher and if that happens the demand of buyers could be less.

“The weaker rupee makes imports costlier thus reducing the margins of the developer. On the other hand, it helps the NRIs who find the Indian property more attractive due to the favorable exchange rate.”

The NRIs and those buying properties with foreign income may now be able to stretch their money further thus encouraging premium-market demand.

What Happens Next?

If banks quickly lower their lending rates, homebuyers could find that their EMIs are lower than before in no time. With property prices going up and buyers’ sentiments getting renewed the real estate sector could see a strong influx of buyers in the days to come.