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Journalism of Courage
Marking another major relief to middle income consumers, within a week since the commencement of the Budget Session 2025, the Reserve Bank of India (RBI) on Friday announced a repo rate cut of 25 basis points, bringing it down to 6.25 per cent.
After keeping the rate unchanged for 11 consecutive policy meetings, the Monetary Policy Committee (MPC), comprising three RBI members and three external members, made the decision to change the borrowing rate. The move also marks the first rate cut since the pandemic.
As the current year’s retail inflation is projected to be 4.2 per cent, the central bank, under the leadership of its new governor Sanjay Malhotra, reduced the rate. The rate was kept constant owing to the Consumer Price Index (CPI) inflation being more than the 6 per cent threshold.
With the Budget exempting middle income group I (under Rs 12 lakh annual income) from income taxes, the borrowing rate cut is expected to redirect consumer spending to long term investments, especially in the real estate sector. In light of this, several industry experts have welcomed the move.
BankBazaar CEO Adhil Shetty, said, “With the tax rate cuts earlier this month, the salaried and the middle class have received a double boost to tackle inflation and boost household savings.
“If you have a 20-year home loan at a rate of 8.75% and had paid 12 EMIs by March, with a rate cut of 25 bps kicking in from April, your interest savings will improve by ₹8417 per lakh,” he added.
Samir Jasuja, the founder and CEO of PropEquity, said, “The 25bps cut in repo rate, along with the announcements in the Budget towards boosting consumption, will help increase economic activity and direct investments towards the real estate sector especially in the affordable and mid-income housing. Making borrowing cheaper will not only help homebuyers, both new and old, but also provide liquidity to the developers.”
Mr. Garvit Tiwari, the director and co-founder of InfraMantra, said, “While the luxury real estate segment may not be impacted much, this move will immensely benefit affordable and mid-income housing. Declining urban consumption is a cause for concern and with this cut, some reversal is likely in the coming quarters.”
Vishal Raheja, founder and managing director of InvestoXpert.com, said, “‘Lower borrowing costs will enhance homebuyer sentiment, making housing loans more affordable and boosting residential sales. The tax relief announced in the Budget, coupled with this rate cut, will increase disposable income and potentially revive demand in the housing sector.”
Sunil Sisodiya, founder of Geetanjali Homestate, said, “Lower interest rates have historically encouraged fence-sitters to take decisive steps towards property investments, driving demand across residential and commercial segments. With the inflation outlook stable and economic growth projected at 6.7%, we anticipate increased liquidity in the market, making real estate an even more attractive asset class.”
“We see this as a significant opportunity for first-time buyers and investors looking to capitalize on a more favorable financial environment,” he added.
Kushal Rastogi, the founder and CEO of Knight Fintech, said, “For fintech lenders, this cautious stance translates into a careful approach to uncollateralized short-term lending. While bond market investors may have hoped for more aggressive rate cuts, the RBI’s strategy aligns with its dual mandate: providing economic stimulus while ensuring long-term price stability by controlling inflation.”
