India’s top banks have swiftly acted on the Reserve Bank of India’s latest rate cut, bringing much-needed relief for home loan borrowers and real estate developers alike.
On 6 June 2025, the RBI reduced the repo rate from 6% to 5.5%, aiming to stimulate economic growth by lowering borrowing costs. Within days, leading banks including HDFC Bank, Canara Bank, and Bank of Baroda passed on the benefits to borrowers by cutting their marginal cost of funds-based lending rates (MCLR). These cuts are expected to lower EMIs, boost affordability, and revive buyer sentiment in the housing market.
The State Bank of India followed suit with a significant 50-basis-point rate reduction. Its repo-linked lending rate (RLLR) now stands at 7.75%, and the external benchmark-based lending rate (EBLR) has dropped from 8.65% to 8.15%. These changes took effect from 15 June 2025. However, some banks such as PNB have chosen to maintain existing rates, indicating a wait-and-watch strategy.
For borrowers on floating-rate home loans, this means reduced monthly payouts. Real estate analysts predict increased momentum in sales, particularly in affordable and mid-income housing sectors.
According to Prashant Sharma, President of NAREDCO Maharashtra, “This is a timely booster. Reduced EMIs will revive fence-sitters and drive demand in cities like Mumbai and Pune.”
Nishant Deshmukh of Sugee Group highlighted the financial and emotional impact of these changes. “Lower EMIs ease pressure and help more Indians become homeowners. Rate cuts also rebuild buyer confidence and speed up decision-making.”
Shraddha Kedia-Agarwal from Transcon Developers added, “First-time buyers can now consider larger or better-located homes. The market could see a jump in enquiries and quicker deal closures.”
With interest rates now more favourable and market sentiments on the rise, developers believe the sector is headed for broader recovery. Experts say that bridging aspiration with affordability is key to sustainable real estate growth through 2025 and beyond.
