What is the story about?
Lower home loan interest rates have eased equated monthly instalments (EMIs) and improved borrowing capacity for homebuyers, but property prices in India’s largest cities remain firm, limiting the impact of cheaper credit on overall housing affordability.
Recent repo rate cuts have pushed home loan rates into the 7.4–8.5% range, encouraging demand, especially from first-time buyers. However, experts say affordability in metro markets such as Delhi-NCR, Mumbai and Bengaluru depends on more than just EMI relief.
EMI relief helps cash flows, not property prices
Lower interest rates have reduced monthly repayment burdens and expanded loan eligibility, but they have not translated into cheaper homes.
Ashish Narain Agarwal, Founder and Managing Director of PropertyPistol, says buyers must avoid assuming that lower EMIs automatically improve affordability.
“Homebuyers must reassess affordability carefully. While reduced repo rates have improved loan eligibility and lowered EMIs, buyers should stress-test affordability with future EMI calculations and aim for larger down payments,” Agarwal said.
Experts recommend keeping EMIs within 30% of net income and factoring in possible interest rate increases over the loan tenure. Buyers are also advised to evaluate the total cost of ownership rather than focusing only on the headline price.
Vishal Raheja, Founder and Managing Director of InvestoXpert Advisors, said a data-driven approach is essential. “With home loan rates around 7.4–8.5%, buyers should ensure their EMIs remain under 30% of net income and evaluate the total cost of ownership to manage long-term financial commitments comfortably,” he said.
A look at home loan rates of select banks
(Source: Bankbazaar)
Why metro prices remain elevated
Despite easier financing, residential prices in major cities have shown resilience.
Experts attribute this to strong demand, improving infrastructure and rising household incomes.
“In urban areas, price growth is supported by income growth and infrastructure development,” said Akshay Taneja, CEO of TDI Infrastructure. “Buyers should track neighbourhood evolution, transport connectivity and access to commercial hubs and social infrastructure such as schools and healthcare.”
Agarwal pointed out that certain city segments are showing signs of overheating, particularly in luxury housing. “In markets like Delhi-NCR, Mumbai and Bengaluru, buyers need to analyse price-to-income ratios, infrastructure pipelines and rental yields to avoid overpaying,” he said.
Raheja added that limited inventory in high-demand locations is also keeping prices elevated. “Buyers should focus on fundamentals such as rental yields, inventory overhang and price-to-income ratios rather than market sentiment,” he said.
Legal checks gain importance as ticket sizes rise
As property prices stay high, legal due diligence has become even more critical, particularly for first-time buyers.
“For first-time buyers, RERA registration, title clearance and valid government approvals should be prioritised to ensure a safe investment,” Agarwal said.
Taneja highlighted the role of developer transparency.
“Clear land titles, construction progress updates and milestone-based communication build trust and protect buyers,” he said.
Experts also advise verifying encumbrance certificates and phase-wise RERA compliance, especially in large or multi-phase developments.
Under-construction vs ready homes: Weighing the trade-off
Lower home loan rates have revived interest in under-construction projects due to lower entry prices and flexible payment plans. However, experts caution that execution risk remains.
“Under-construction homes offer flexibility and lower upfront costs, but buyers must carefully assess the developer’s preparedness, planning tools and construction schedules,” Taneja said.
Raheja said the choice depends on risk appetite. “Ready-to-move-in homes offer immediate possession and fewer risks, while under-construction properties require deeper due diligence. In both cases, buyers must prioritise legal clarity and developer track records,” he said.
Bottomline
Experts agree that while falling interest rates provide short-term relief, they do not automatically make homes more affordable in big cities. Buyers need to balance EMI comfort with long-term value, legal safeguards and realistic price expectations.
Recent repo rate cuts have pushed home loan rates into the 7.4–8.5% range, encouraging demand, especially from first-time buyers. However, experts say affordability in metro markets such as Delhi-NCR, Mumbai and Bengaluru depends on more than just EMI relief.
EMI relief helps cash flows, not property prices
Lower interest rates have reduced monthly repayment burdens and expanded loan eligibility, but they have not translated into cheaper homes.
Ashish Narain Agarwal, Founder and Managing Director of PropertyPistol, says buyers must avoid assuming that lower EMIs automatically improve affordability.
“Homebuyers must reassess affordability carefully. While reduced repo rates have improved loan eligibility and lowered EMIs, buyers should stress-test affordability with future EMI calculations and aim for larger down payments,” Agarwal said.
Experts recommend keeping EMIs within 30% of net income and factoring in possible interest rate increases over the loan tenure. Buyers are also advised to evaluate the total cost of ownership rather than focusing only on the headline price.
Vishal Raheja, Founder and Managing Director of InvestoXpert Advisors, said a data-driven approach is essential. “With home loan rates around 7.4–8.5%, buyers should ensure their EMIs remain under 30% of net income and evaluate the total cost of ownership to manage long-term financial commitments comfortably,” he said.
A look at home loan rates of select banks
| Banks | Starting Interest Rate (p.a.) |
| Kotak Mahindra Bank | 7.70% p.a. onwards |
| Union Bank of India | 7.45% p.a. onwards |
| Bank of Baroda | 7.45% p.a. onwards |
| Central Bank of India | 7.35% p.a. onwards |
| Bank of India | 7.35% p.a. onwards |
| State Bank of India | 7.50% p.a. onwards |
| LIC Housing Finance | 7.50% p.a. onwards |
| Axis Bank | 8.35% p.a. onwards |
(Source: Bankbazaar)
Why metro prices remain elevated
Despite easier financing, residential prices in major cities have shown resilience.
Experts attribute this to strong demand, improving infrastructure and rising household incomes.
“In urban areas, price growth is supported by income growth and infrastructure development,” said Akshay Taneja, CEO of TDI Infrastructure. “Buyers should track neighbourhood evolution, transport connectivity and access to commercial hubs and social infrastructure such as schools and healthcare.”
Agarwal pointed out that certain city segments are showing signs of overheating, particularly in luxury housing. “In markets like Delhi-NCR, Mumbai and Bengaluru, buyers need to analyse price-to-income ratios, infrastructure pipelines and rental yields to avoid overpaying,” he said.
Raheja added that limited inventory in high-demand locations is also keeping prices elevated. “Buyers should focus on fundamentals such as rental yields, inventory overhang and price-to-income ratios rather than market sentiment,” he said.
Legal checks gain importance as ticket sizes rise
As property prices stay high, legal due diligence has become even more critical, particularly for first-time buyers.
“For first-time buyers, RERA registration, title clearance and valid government approvals should be prioritised to ensure a safe investment,” Agarwal said.
Taneja highlighted the role of developer transparency.
“Clear land titles, construction progress updates and milestone-based communication build trust and protect buyers,” he said.
Experts also advise verifying encumbrance certificates and phase-wise RERA compliance, especially in large or multi-phase developments.
Under-construction vs ready homes: Weighing the trade-off
Lower home loan rates have revived interest in under-construction projects due to lower entry prices and flexible payment plans. However, experts caution that execution risk remains.
“Under-construction homes offer flexibility and lower upfront costs, but buyers must carefully assess the developer’s preparedness, planning tools and construction schedules,” Taneja said.
Raheja said the choice depends on risk appetite. “Ready-to-move-in homes offer immediate possession and fewer risks, while under-construction properties require deeper due diligence. In both cases, buyers must prioritise legal clarity and developer track records,” he said.
Bottomline
Experts agree that while falling interest rates provide short-term relief, they do not automatically make homes more affordable in big cities. Buyers need to balance EMI comfort with long-term value, legal safeguards and realistic price expectations.
