RBI MPC Cuts Repo Rate To 5.25%: What It Means For Your Home Loan EMIs And Housing Market

The Reserve Bank of India’s Monetary Policy Committee (MPC) delivered a significant policy move on Friday, announcing a 25‑basis‑point cut in the repo rate, bringing it down to 5.25 per cent. 

This marks the first rate reduction in months and arrives at a crucial moment for borrowers, real estate developers, and the wider economy.

Alongside the repo rate cut, the Standing Deposit Facility (SDF) now stands at 5 per cent, while the Marginal Standing Facility (MSF) and bank rate have been revised to 5.5 per cent.

Why the RBI Finally Moved

The rate decision comes against a backdrop of unusually favourable macroeconomic conditions. Inflation has softened substantially, growth has accelerated to a six‑quarter high, and liquidity remains tight enough to warrant intervention. 

While many economists expected the central bank to remain cautious, the MPC unanimously opted for a rate cut while maintaining its neutral stance.

RBI Governor Sanjay Malhotra announced, “The MPC also decided to continue with a neutral stance. The MPC noted that headline inflation has eased significantly and is likely to remain softer than earlier projections.”

The MPC met from Wednesday to Friday, in what many analysts described as a defining policy session. After  consecutive meetings of holding rates, the improving inflation-growth mix opened the door for renewed monetary easing.

What This Means for You: Home Loan EMI Relief Ahead

Real estate developers say the move could significantly boost affordability and strengthen sentiment in the housing market.

Shiv Garg, Director, Forteasia Realty Pvt. Ltd, explained, “The Reserve Bank of India (RBI) has decreased the policy rate to 5.25 per cent and made a bold statement by adopting the theme of growth support. This policy measure, along with an upgraded FY26 GDP forecast, will usher in a new cycle of launches, the consolidation of weaker players, and increased institutional investment.”

Amit Goyal, Managing Director at India Sotheby’s International Realty, noted that the timing of the RBI’s move could prove pivotal for the sector. He remarked that after years of elevated input costs, a softer interest‑rate environment finally creates breathing room for both developers and homebuyers. According to him, cheaper capital tends to restore confidence across the ecosystem, from individual borrowers to institutional players, and is likely to support steadier pricing, healthier transaction volumes, and greater market stability. With the economy expanding by 8.2 per cent in the second quarter, Goyal said the rate cut aligns well with the broader economic momentum, reinforcing liquidity and strengthening sentiment.

Relief For Homebuyers

For millions of homebuyers, this repo rate cut could bring measurable financial relief, provided banks pass on the benefit swiftly.

Anurag Goel, Director, Goel Ganga Developments, added that the rate cut is expected to have a major impact on home loan rates. "The combination of lower EMIs and a more optimistic growth outlook creates a perfect timing for end‑users in the affordable and mid‑income segments," he explained.

Praveen Sharma, CEO of REA India (Housing.com), shared that the rate reduction arrives at a moment when residential demand, particularly in mid‑income and premium categories, is already running strong. He said the cut should meaningfully ease EMI burdens, nudging fence‑sitters towards purchase decisions and providing fresh impetus to both new launches and sales. Sharma added that with inflation under control and macro fundamentals holding firm, the policy stance is likely to encourage sustained growth in the housing market in the months ahead.

Vimal Nadar, National Director & Head, Research at Colliers India, added, "Lower borrowing costs will further improve affordability and buyer sentiment, particularly in affordable & mid-income housing segments.”

Jash Panchamia, Executive Director, Jaypee Infratech Limited, added that the move comes at an opportune moment. "The RBI’s decision to cut the repo rate by 25 basis points comes at an opportune moment, with inflation under control and the economy on a stable footing. This move is expected to stimulate consumption across sectors, reinforcing overall economic growth. The housing sector, particularly affordable and mid-segment housing, stands to benefit as lower home loan rates are likely to encourage cautious buyers to make their purchase decisions. Consequently, this could create a positive ripple effect, driving demand."

What Comes Next for Borrowers and Markets?

With inflation easing and GDP growth firming up, analysts expect banks and housing finance companies to begin adjusting their lending rates in the coming weeks. If passed on fully, the rate cut could:

• Reduce monthly EMIs on floating‑rate home loans
• Improve sentiment among new homebuyers
• Boost sales in affordable and mid‑income housing
• Lower borrowing costs for developers and businesses

As India steps into 2026 with stronger economic footing, the RBI’s latest move could help revive credit demand, stimulate the real estate sector, and support growth, while giving homebuyers a much‑needed breather on their EMIs.