The jumbo 50 bps rate cut by the Reserve Bank of India (RBI) will directly benefit home loan borrowers, especially existing ones, by reducing their interest burden, experts said on Friday.

The decision comes at a pivotal time, as India, now the world’s fourth-largest economy, is witnessing strong real estate momentum across metros as well as tier 2 and 3 cities.

“Lower lending rates will directly enhance home loan affordability, particularly in interest-sensitive categories like mid-income and affordable housing. Reduced EMIs are expected to significantly improve buyer sentiment and encourage first-time homebuyers to enter the market,” said Shekhar G Patel, President, the Confederation of Real Estate Developers' Associations of India (CREDAI).

The repo rate is the rate at which the RBI lends money to banks. When it goes down, banks usually lower the interest rates they charge customers.

This means personal, home, and business loans could become cheaper, and people may pay lower EMIs. It’s good news for anyone with a loan or looking to borrow.

As per external benchmark lending rules, existing borrowers will get the entire benefit of the 50-bps repo rate cut.

“This cut is bigger than expected. Most people thought the RBI would reduce the rate by only 25 basis points. This move marks a total of 100 basis points cut in interest rates since February 2025. It is aimed at supporting the economy by making loans cheaper and improving liquidity,” said Amit Bivalkar, Founder Director at Sapient Finserv.

With the repo rate reduction, home loan borrowers are definitely expected to benefit.

“We have already seen some return on investment (ROI) benefits from the previous two rate cuts being passed on to borrowers. With a 50 bps rate cut, the home loan EMIs will come down substantially, provided the transmission occurs in real-time and not with a lag,” said Kanika Singh Chief Risk Officer– IMGC (India Mortgage Guarantee Corporation).