Mumbai: The Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points, bringing it down from 5.5 percent to 5.25 percent. This marks the fourth rate cut of 2025, taking total reductions
this year to 125 bps. The Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, met on December 3, 4 and 5 and unanimously voted for the cut after reviewing inflation, growth and liquidity conditions.
Why the Rate Cut Matters
Governor Malhotra said the decision followed a detailed analysis of the economic outlook. With this change, the SDF rate is now 5 percent, while MSF and the bank rate stand at 5.5 percent. The policy stance continues to remain Neutral.
To support liquidity, the RBI also announced significant measures, including Rs 1 lakh crore of government securities OMO purchases and a three-year USD 5 billion dollar-rupee swap. These steps aim to inject durable liquidity into the financial system.
Will Home Loans Become Cheaper Now?
With lending costs expected to fall, homebuyers are eagerly waiting to see how banks respond. Since most home loans today are linked to external benchmark lending rates, repo cuts generally translate to lower EMIs—though the speed of transmission depends on lenders.
Real Estate Sector Welcomes the Move
Real estate experts called the decision a boost for housing demand.
Anuj Puri, Chairman of ANAROCK Group, said the cut strengthens the purchasing power of homebuyers, especially in affordable and mid-income segments, which are the most sensitive to interest rates. With housing prices rising nearly 10 percent in 2025, this cut could improve affordability and push sales momentum into early 2026.
Puri added that even though luxury housing continues to grow, the rate cut may bring back price-conscious buyers who had been waiting on the sidelines.
Industry Voices See Renewed Buyer Confidence
Developers also expressed optimism:
Pramod Kathuria, CEO of Easiloan, said lower rates will increase borrower purchasing power and improve demand, while AI-backed loan platforms can help buyers compare options faster.
Praveen Sharma, CEO of REA India (Housing.com), said the move could bring meaningful EMI relief and encourage both new launches and higher sales.
With four rate cuts already in place this year, banks are expected to start passing on the benefits soon—something homebuyers will be watching closely.
