Crorepati house! EMIs on Rs 1 crore home loan may drop to Rs 68,000 after RBI's 50 bps rate cut

Economic Times

3 days ago

In a move that could redefine the trajectory of India's housing market, the Reserve Bank of India (RBI) slashed the repo rate by 50 basis points (bps) during its June 2025 monetary policy meeting, bringing it down to 5.5%—a level not seen in over three years.
ADVERTISEMENT The central bank's decision signals a clear shift toward a more accommodative stance in response to easing inflation and the need to stimulate demand across sectors.
Among the biggest beneficiaries of this rate cut are home loan borrowers, both existing and prospective. The cost of borrowing is set to come down, leading to lower Equated Monthly Instalments (EMIs) or shorter loan tenures.
For a country where housing affordability has long been a challenge—particularly in the affordable and mid-income segments—this rate cut may prove to be a turning point.The RBI's move is also expected to inject a fresh wave of optimism in India's real estate market, especially after a prolonged period of cautious lending, fluctuating interest rates, and high input costs.
As per market experts, the cut in the repo rate—combined with a 100 bps cut in the Cash Reserve Ratio (CRR)—will lead to more liquidity in the banking system, thus enhancing banks' ability to lend more aggressively.
ADVERTISEMENT With the repo rate now at 5.5%, home loan interest rates are expected to fall significantly. For high-credit-score borrowers, the new rates could hover around 7.5%, compared to earlier rates of 8.25% or more.This means that for a home loan of ₹1 crore, monthly EMIs could drop to Rs 68,000–Rs 70,000, depending on tenure and loan structure, suggest experts.
ADVERTISEMENT Ankit Shah, COO and CMO of Grahm Realty, calls this a transformative step: 'The reduction to 5.5% is a much-needed and welcome move. After years of volatility, we are entering a more stable phase"."For aspiring homebuyers—especially first-timers—this is a golden window. Where rates previously started at around 8.25%, they could now begin at approximately 7.5%, especially for borrowers with strong credit scores," he said.
ADVERTISEMENT "This shift means a notable decrease in monthly EMIs. For instance, on a home loan of ₹1 crore, EMIs may now fall in the range of ₹68,000 - ₹70,000, making homeownership far more accessible," added Shah.
Also Read : Rs 7.71 lakh savings on Rs 50 lakh home loan: Check how much you will save after RBI's 50 bps repo rate cut
Twin Benefits: Lower EMIs and Ample Liquidity
ADVERTISEMENT Beyond just cheaper EMIs, the RBI's simultaneous 100 bps CRR cut is expected to infuse Rs 2.5 lakh crore into the banking system. This provides banks with more capital to lend, potentially easing loan disbursal processes and increasing competition among lenders to offer lower rates.Maanu Dewan and Raunaq Arora, Founders of Ace Consulting, say: 'Lower interest rates mean reduced home loan EMIs—directly improving affordability for buyers and stimulating demand in both primary and resale segments'.'This move comes at a perfect time as premium and luxury housing sees renewed interest. Expect stronger momentum in residential sales in the coming quarters,' he said.While premium and luxury housing bounced back strongly in the post-COVID era, affordable housing lagged. According to ANAROCK Property Consultants, the affordable segment's share of total sales dropped from 38% in 2019 to just 18% in 2024. Similarly, new launches in this segment also fell, making it one of the most under-served markets in the country.Anuj Puri, Chairman of ANAROCK Group, sees the current move as a potential revival point. 'This is the third consecutive time this year that the apex bank has cut the repo rates. It is sincerely hoped that banks pass on the benefits of this move seamlessly to borrowers,' he said.'This effectively lowers the cost of borrowing, making home loan EMIs easier on the pocket and thereby directly improving affordability for buyers. However, he also warns of headwinds from global trade tensions and rising construction costs,' highlighted Puri.The RBI's decision is also seen as a much-needed correction to an increasingly top-heavy housing market.
Shishir Baijal, Chairman and Managing Director, Knight Frank India, highlights: 'Over the last few years, the strong housing market momentum was increasingly concentrating in the premium end even as there were signals of weakening the lower segments.' 'With this cumulative 100 basis point cut in the policy interest rate we expect rekindling of the lower segments as affordability will witness a meaningful improvement for such homebuyers,' he said.Baijal stresses the importance of greater transmission of the rate cut from banks to consumers, and a focused supply-side response from developers to ensure momentum sustains.Perhaps the most significant beneficiaries of the rate cut could be Tier 2 and Tier 3 cities, where affordability, job creation, and infrastructural growth are interlinked.
Amit Mamgain, Director at Yugen Infra, notes: 'a home loan with an interest rate below 7.75% will bring affordability within reach for homebuyers, especially in the mid-income and affordable housing sectors, which are highly sensitive to the rate offered'. He believes that this decision will further promote the Government's housing-for-all mission and accelerate momentum in Tier 2 and Tier 3 cities, where demand is primarily determined by lending costs.The RBI's 50 bps repo rate cut has the potential to revive demand, ease borrower stress, and reinvigorate housing supply—especially in the affordable and mid-income segments that have long been waiting on the sidelines.
'Residential real estate closed FY2025 with 1 bn sq. ft of sales, down 3% yoy, largely impacted by Hyderabad, which saw a 33% yoy decline,' Kotak Institutional Equities said in a June 2025 note. 'Valuations for most residential real estate stocks stand at 7-10X adj. EV/ EBITDA (FY2026E) post some recovery in the stock prices,' the note said.Most developers have guided for double-digit pre-sales growth (~20% yoy in FY2026E for our coverage), aided by industry growth and market share gains.If banks move swiftly to pass on the benefits and developers respond with buyer-friendly offerings, India's housing sector could be on the cusp of a broad-based revival.While challenges like global macroeconomic uncertainty and rising input costs persist, the central bank's latest decision sends a clear message: it is time to make homeownership more accessible, inclusive, and affordable.
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