According to RBI Governor Sanjay Malhotra, the Monetary Policy Committee of the RBI has decided to reduce the repo rate by 25 basis points to 6%. The 2025–26 fiscal year (FY26) begins with this MPC meeting. The RBI has been steadily loosening policy since October 2024 by implementing stance changes, rate decreases, liquidity support, and flexible exchange rate management. The RBI dropped the repo rate to 6.25 percent in February 2025, the first cut in almost five years, after maintaining it at 6.5 percent since February 2023. Let’s us delve into what industry leaders have to say:
RBI’s decision to reduce the repo rates by 25 bps (to 6%) for the secondQ time this year was expected in the backdrop of moderating inflation. Home loan borrowers may not see much meaningful or immediate interest rate relief. Banks have not transmitted earlier MPC rate cuts to borrowers because of higher funding costs, pressure on net interest margins, higher NPAs, and a cautious lending climate.
If banks do pass on the benefits of the last two rates cuts, it will be a boost to homebuyers, particularly for those eyeing affordable housing. Many first-time homebuyers who had been hesitating to take the plunge may make their move if home loan rates reduce.
Housing prices have risen across the top 7 cities in the last one year. As per ANAROCK Research, Q1 2025 saw average housing prices rise by anywhere between 10-34% in the top 7 cities, with NCR and Bengaluru recording the highest 34% and 20% jump, respectively. The average prices in top 7 cities collectively stood at approx. INR 7,550 per sq. ft. in Q1 2024-end, while in Q1 2025-end it increased to approx. INR 8,835 per sq. ft. – a collective increase of 17% annually.
Home loan borrowers whose lenders don't pass on the rate cut could consider negotiating a lower rate or a balance transfer. They should keep their expectations realistic as there may be only partial relief, if any. Any potential EMI reduction should be used to prepay home loans or invest for higher returns instead of on mere consumption.
The RBI’s move to cut the repo rate by 25 bps and shift to an accommodative stance strongly signals that growth is back in focus. From my perspective, this is a welcome step, especially at a time when consumers and businesses are navigating tighter budgets and some uncertainty globally.
In the lending space, even a small rate cut can have a meaningful impact. Lower rates mean lower EMIs, and that gives people confidence to borrow and spend, whether it’s a home loan, personal loan, or credit line. For fintechs like Freo, this creates the right environment to support borrowers more actively, especially the younger, credit-conscious audience we serve.
The stance change also matters. It tells us the RBI is ready to be flexible and proactive, which is key for maintaining financial momentum. The real test now is how quickly banks transmit this cut, because only then will the real benefits be felt on the ground.
With the RBI cutting interest rates, this might be the last chance to lock in good FD returns. If rates continue to fall, new fixed deposits may offer lower interest. Investors who rely on steady income should act soon. At the same time, it’s a good idea to explore other options like debt mutual funds or balanced funds, depending on your risk comfort. This is a smart time to review your investments and plan ahead.
The RBI’s rate cut comes at the right time. With global trade tensions brewing and inflation easing, this move gives the economy a much-needed breather. Cheaper loans mean more spending and investment, which can really help drive growth in the months ahead. By shifting to an accommodative stance, the RBI is also making it clear—it’s ready to step in and support the economy if things get tougher. It’s a smart, balanced move in an uncertain global environment.
The RBI's recent policy measures demonstrate a deliberate balancing act: stimulating economic growth while containing inflation pressures amid global uncertainties. By shifting to an accommodative stance, the central bank signals readiness for additional interventions should economic conditions deteriorate. Investors and policymakers should closely track global trade developments and domestic indicators, as these factors will shape the trajectory of future monetary policy decisions.
Offset Global Trade Uncertainties: This rate cut will help support economic growth amidst uncertainties created by trade war
Increased Borrowing: Banks will pass on the lower borrowing costs to offer loans at lower interest rates to businesses and consumers, stimulating economic activity.
Boost to Economic Growth: This will encourage further business expansion, infrastructure development, and consumer spending, as borrowing becomes more affordable.
The repo rate cut of 25 basis points is in line with current market conditions as the headline inflation in February was within the RBI's tolerance limit due to a sharp decline in food prices. On the other hand, the fear of recession is also looming globally amid trade friction between the USA and its trade partners. This reduction in the repo rate is expected to catalyse domestic consumption, boosting GDP growth. Moreover, the change in stance from ‘Neutral to Accommodative’ points towards easy monetary policy and future rate cuts, leading to a reduction in mortgage rates and a boost to the real estate demand.
In the first MPC meeting of the fiscal 2025-26, RBI has further reduced the repo rate by 25 bps to 6.0%. The change in stance from “neutral” to “accommodative” is indicative of a growth supportive monetary policy and this becomes more critical in the backdrop of heightened uncertainty in global markets following the levy of reciprocals tariffs by the US. Although the intensity and impact of ongoing tariff escalations needs to be fully ascertained, RBI remains optimistic on domestic growth outlook and projects the GDP to grow by 6.5% in the fiscal 2025-26. Recent easing of inflation is likely to increase disposable income which in turn has the potential to boost domestic consumption.
Consecutive reduction in benchmark lending rates will boost homebuyers’ sentiments and resultantly improve housing demand particularly in affordable and middle-income segments. Real estate developers across segments also stand to benefit from likely lowering of financing costs. Overall demand and real estate growth is likely to be on the upswing, given the anticipation of further easing in monetary policy. However, global headwinds and trade frictions will remain a key monitorable for all economic sectors including real estate.
RBI has also proposed securitization of stressed assets through a market-based mechanism, in addition to the Asset Restructuring Company (ARC) route. Reduction in borrowing costs coupled with an alternate resolution mechanism for stressed assets is likely to benefit real estate stakeholders in the near-mid-term. This is expected to provide significant relief to cash strapped developers and several stalled projects due to financial constraints.
The RBI’s 0.25% repo rate cut is a stabilising and much-needed move at a time when global economic turmoil poses challenges. By ensuring liquidity and keeping borrowing costs attractive, this decision by the central bank will bolster corporate confidence and investments. For India's housing sector, if the rate cut is passed on as a benefit on home loans, it will support the demand momentum, and help the real estate industry ride over this period of uncertainty.
The RBI’s second consecutive repo rate cut, bringing it down by 25 basis points to 6%, is a timely and encouraging move for the real estate sector. For end-users, the lower rate translates to more affordable EMIs, making home ownership more achievable at a time when property values are inching upward. Moreover, this further strengthens liquidity in the system, enabling developers to secure funding and accelerate new project rollouts. As inflation remains under control, this rate cut could serve as a stabilizing force amid broader global uncertainties, reinforcing stakeholder confidence in residential real estate.
The RBI’s decision to cut the repo rate by 25 basis points to 6% is a strong, forward-looking signal for the broader credit ecosystem. For borrowers across segments—be it home loans, personal loans, business loans, or loans against property - this translates into more affordable access to capital and lower EMIs. From a lender’s standpoint, enhanced liquidity and lower cost of funds create an environment where institutions can expand credit offerings more aggressively, target new customer segments, and fine-tune risk-based pricing models. At a time of rising global uncertainties, this move will boost credit demand, improve affordability, and enhance liquidity across the lending ecosystem.
The RBI’s decision to reduce the repo rate by 25 basis points to 6% reflects a deliberate shift in focus—from aggressive inflation control to reigniting economic growth. This accommodative stance is expected to ease borrowing costs across sectors, including critical areas like healthcare lending. As access to affordable credit improves, more families will be empowered to finance medical treatments without delay—an essential enabler for both public health and economic resilience. The move underscores the central bank’s intent to support inclusive growth by making credit more accessible where it matters most.
The RBI’s 25 bps repo rate cut is a clear signal to support growth while maintaining vigilance on inflation. For India’s credit-starved MSMEs and middle-class borrowers, even a marginal reduction in borrowing costs can unlock meaningful financial relief. However, the real test lies in the speed and efficiency with which the financial system transmits this benefit to end consumers. Monetary policy can be a powerful enabler, but its real impact will depend on coordinated execution, structural reforms, and the agility of our financial institutions. The MPC’s stance reflects cautious optimism—acknowledging easing inflation trends while staying alert to global uncertainties such as volatile commodity prices, geopolitical tensions, and shifts in global monetary policy.
We expect the rate cut cycle to be deeper post the stance change to accommodative. We now see another 50bps cut in the remainder of 2025 v/s earlier expectation of 25bps. Another factor is the comfort of inflation with RBI seeing durable alignment of headline inflation with the 4%-target in FY26. Despite the downward revision in FY26 GDP estimate to 6.5% from 6.7%, we continue to see downside risk from tariff tensions. In our assessment the downward impact of growth from tariffs is 0.5%, which hasn’t been baked into the GDP estimate.
While the governor maintained the delinking of the stance from liquidity conditions, we continue to expect another INR4tn of durable liquidity infusion in FY26. This is required to ensure that system liquidity is in INR2tn surplus (or 1% of NDTL). The latter is essential for transmission of rate cuts to take place.
The Reserve Bank of India's decision to reduce the repo rate to 6%—the second consecutive reduction this year—is a significant boost for the real estate industry. Lower interest rates on home loans will make housing more affordable, encouraging demand across segments—from affordable and mid-income homes to luxury projects. For developers, reduced borrowing costs mean easier project financing, faster completions, and greater confidence to launch new projects. This will help boost both supply and demand, driving job creation and supporting economic growth.
The move also signals confidence to investors and financial institutions, likely leading to increased investments in the sector. Overall, this rate cut is set to maintain momentum, strengthen buyer sentiment, and support long-term growth in real estate.
The RBI’s second repo rate cut to 6% is a significant step that’s expected to deliver a strong boost to the auto and lending sectors. By reducing the cost of funds for banks and NBFCs, this move directly supports more affordable lending and improved liquidity in the system. For the automobile industry as a whole, this provides the opportunity to push credit growth faster — particularly in the two-wheeler, EV, and mass-market passenger vehicle segments, where price remains the predominant buying driver.
The rate cut will also help strengthen balance sheets of lending institutions, enabling them to extend credit more effectively and at competitive prices. With liquidity expected to improve, Banks & NBFCs will be in a position to drive greater financial inclusion as well as speed up India's mobility and economic momentum.
The additional 25-basis points rate cut to 6% by the Reserve Bank of India is a significant step in supporting growth and completely in line with the industry’s expectations. As I had mentioned earlier, since nearly 80% of Aadhar Housing Finance's existing borrowers are on floating rates this reduction will benefit them. At some stage soon this will lead to reduction in Aadhar RPLR thereby reducing EMI burden. The only wait now is for the banks to pass on this benefit to us.
Furthermore, many first-time buyers in the Economically Weaker Section (EWS) and Lower Income Group (LIG) segments will now find it easier to take that crucial step towards home ownership as this move directly translates into lower EMIs and improved affordability. This proactive liquidity support from the central bank clubbed with government initiatives like PMAY 2.0, (SWAMIH) 2.0 fund, income tax exemptions, the introduction of a mortgage guarantee fund will positively accelerate housing demand and aid the government’s vision of housing for all.”
The RBI’s decision to reduce the repo rate to 6.0% is both timely and forward-looking. In the backdrop of global trade frictions and tariff uncertainties, the central bank’s proactive stance underscores its commitment to supporting growth while maintaining inflation within target. The move to an accommodative stance signals confidence in India’s macroeconomic resilience and a willingness to act decisively in bolstering domestic demand. We expect further calibrated rate cuts ahead as global volatility continues to cloud the outlook, especially for interest rate-sensitive sectors like real estate. This policy direction could significantly lower borrowing costs, improve liquidity flows, and catalyze investments across commercial and retail real estate segments.
