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Home Loan: The Reserve Bank of India (RBI) is expected to significantly reduce home loan rates following the repo rate cut. It is being reported that they will reach pre-2008 global financial crisis levels.

How much will EMIs drop now? Home loan rates will fall historically! Savings will be substantial.

Home Loan: The RBI's Monetary Policy Committee today reduced the repo rate by 25 basis points to 5.25%, which is expected to lead to a significant decline in home loan rates. It is being predicted that home loan rates will return to the level reached before the 2008 global financial crisis.

Many banks, such as Union Bank, Bank of India, Bank of Maharashtra, and Indian Overseas Bank, already offer home loans at 7.35%. The repo rate cut will reduce the interest rate to 7.1%. Consequently, a 0.25 point rate cut on a 15-year home loan of ₹1 crore will reduce the EMI by approximately ₹1,440 per month.

Bankers say that to reduce the price of home loans to 7.1% for new borrowers, lenders would have to significantly cut deposit rates or change the spread over the benchmark rate. If this happens, new borrowers could have to pay higher interest rates than existing floating-rate borrowers.

Unless deposit rates are reduced, banks' net interest margins will decline, while non-banking finance companies will immediately benefit from lower funding costs. "For the NBFC sector, and especially for last-mile financiers like Shriram Finance, this policy is a big help. The continued neutral stance, combined with the announcement of ₹1 lakh crore worth of OMO purchases, ensures that liquidity remains healthy," he said.

Ankur Jalan, CEO of Golden Growth Fund, says that from a depositor's perspective, a 25bps cut in the repo rate will raise concerns about declining returns on fixed deposits and other interest-bearing savings. Furthermore, this could force banks to lower deposit rates in the coming months, making it more difficult for savers to earn good returns. While lower rates can support broad-based economic growth, wealthy investors and family offices often redirect capital to higher-yielding products like real estate-focused Category II AIFs to maintain real yields, improving fundraising momentum for these funds. A low interest rate environment also reduces the cost of capital for developers and strengthens project viability, which in turn increases opportunities for AIFs.

Preksha Singh, CEO of Agrashil Infratech, said that India's real estate market is already a hot spot for global investors and the NRI community. Now, the reduction in interest rates will make investment even more profitable. A stable economy, growing demand, and low EMIs will combine to make India a promising investment destination over the next few quarters.