RBI holds repo rate at 5.5%, borrowers may enjoy up to ₹7.5 lakh savings on home loans

The Reserve Bank of India (RBI), on October 1, kept the repo rate steady at 5.5% after the Monetary Policy Committee (MPC) meeting. The MPC, led by RBI governor Sanjay Malhotra, also chose to keep its neutral stance.

This pause comes after a cumulative 100-basis-point cut since the start of the year, the benefits of which have already been felt by both borrowers and depositors.

Adhil Shetty, CEO of BankBazaar.com, says, "For home loan borrowers, the rate cuts have meant significant relief. On a ₹50 lakh loan for 20 years, the drop from 8.5% to 7.5% translates into savings of around ₹7.5 lakh. If customers retain their earlier EMI levels, the savings can go up to ₹15.4 lakh over the tenor. With banks maintaining their spreads and festive offers on processing fees and special rates, this is one of the best times in recent years to invest in a home."

For depositors, the trend has reversed. Fixed deposit rates above 7.25% are now limited to a few banks, with most major banks offering 6.75–7% for popular tenures. Senior citizens continue to receive a 25–50 basis point premium, but this margin is shrinking. "Even with no new cut today, the peak of deposit rates is behind us. Savers would do well to lock into multi-year deposits while these levels still hold,” adds Shetty.

Analysts note that despite global challenges such as U.S. tariffs on Indian exports and increasing visa costs, domestic housing demand remains strong across both affordable and premium segments. A steady interest rate environment, along with festive sentiment, GST relief, and India’s robust economic fundamentals, will support the real estate sector's growth as it moves into 2026.

Manju Yagnik, Vice Chairperson of Nahar Group and Senior Vice President of NAREDCO- Maharashtra, said, "The RBI’s decision to hold the repo rate steady at 5.5% in October—after a cumulative 100 basis point cut earlier this year—signals a thoughtful balance between growth and stability. For the real estate sector, this consistency is a positive enabler during the festive season, when home-buying activity traditionally peaks."

"Predictable EMIs give buyers the confidence to act on long-awaited decisions, especially with the recent GST rationalisation already improving affordability. Developers, too, benefit from clarity in financing, enabling timely project planning and execution," Yagnik said.

According to the latest ANAROCK data, residential sales in India's top 7 cities in Q3 2025 decreased 9% year-over-year to 97,080 units. However, the overall sales value rose 14% to INR 1.52 lakh crore, indicating a shift in demand towards premium and mid-segment homes.

However, the recent GST rate cuts provide significant relief. With GST on cement reduced from 28% to 18%, construction costs are expected to fall by 3-5%, potentially reducing home prices by 1-1.5% for buyers.

Anuj Puri, Chairman - ANAROCK Group said, "This reduction could save homebuyers INR 1-3 lakh on purchases, particularly benefiting affordable and mid-segment housing where cost sensitivity is high."

ANAROCK data shows that the share of affordable housing has declined from 38% in 2019 to just 18% in 2024, making these GST cuts crucial for reversing this trend. "The combination of stable interest rates and lower construction costs creates a favourable environment for housing demand, especially during the ongoing festive season," said Puri.