Repo Rate Slashed to 5.50%: A Window of Opportunity for Homebuyers

Homebuyers are poised to gain from the Reserve Bank of India’s decision to cut the repo rate by 50 basis points from 6.00% to 5.50% on June 6, 2025. This marks the third consecutive reduction and is expected to boost loan affordability, especially for first-time buyers and those targeting affordable housing, provided banks pass on the benefits to consumers. Lower interest rates can translate into reduced EMIs, potentially reviving demand in a sector that saw a slight dip in sales during Q1 2025. Developers may also benefit through cheaper borrowing costs, helping clear unsold inventory and easing financial stress across segments.

In addition to the repo rate cut, the reduction in the Cash Reserve Ratio (CRR) will inject greater liquidity into the banking system. With more funds available, banks can offer lower home loan rates, further boosting buyer confidence in affordable and mid-income housing. Economists note that such measures could attract institutional capital into real estate debt and equity, unlocking financing mechanisms for faster project completion. However, these positives may be tempered by ongoing global trade tensions, which have increased construction material costs and introduced uncertainty, potentially squeezing developer margins and affecting luxury and commercial project demand.