The Reserve Bank of India has reduced the repo rate by 25 basis points, bringing it down from 5.5% to 5.25%. This marks a total reduction of 125 basis points in 2025, sparking fresh hope among homebuyers for affordable loan EMIs as banks prepare to revise lending rates. The Monetary Policy Committee (MPC), which met on December 3, 4 and 5, voted unanimously after assessing inflation control, liquidity status and growth expectations.
Governor Sanjay Malhotra confirmed the move, adding that the Standing Deposit Facility (SDF) now stands at 5%, while MSF and bank rate remain at 5.5%. Along with the rate cut, RBI also announced liquidity measures including ₹1 lakh crore OMO purchases and a $5 billion dollar-rupee swap, aimed at supporting financial markets and ensuring banking stability.
Real estate experts believe this announcement could boost buying sentiment. ANAROCK Chairman Anuj Puri stated that the move comes at a crucial time when property prices have risen nearly 10% across top cities this year. If banks pass on the benefit quickly, EMIs are expected to fall, potentially driving strong sales momentum into Q1 2026, especially in affordable and mid-income housing brackets.
Developers welcomed the decision. Tribeca Developers CEO Rajat Khandelwal said the cut will relieve buyers in high-cost markets like Mumbai, NCR and Pune, where EMI pressure has been steep. However, some caution remains. With the rupee weakening, material import costs may rise, squeezing builder margins. At the same time, the weaker rupee could encourage NRI-led investment, making Indian real estate more financially appealing.
Industry voices including Sterling Developers and Mt. K Kapital added that this is a positive reinforcement for the property market, business liquidity and economic stability. The reduction is expected to support consumption, boost sentiment and maintain growth momentum going forward. Most home loans today are linked to external benchmark lending rates, meaning once banks revise their rate sheets, EMI reduction should follow. With RBI announcing four cuts this year, buyers will now watch how quickly lenders transmit this benefit.
