RBI policy: How Rs 50 lakh home loan borrowers can save up to Rs 15.4 lakh

RBI keeps repo rate steady at 5.5%. Along with GST cuts, experts say homebuyers gain relief while developers see improved affordability

The Reserve Bank of India (RBI) on Wednesday kept the repo rate unchanged at 5.5 per cent, offering relief to borrowers and developers who are already benefitting from recent GST cuts. The decision was welcomed by housing sector voices as a confidence booster for homebuyers.

 

In its previous policy review in August, the central bank had also maintained rates as inflation showed signs of easing.

 

“This pause comes after a cumulative 100-basis point cut since the start of the year, the benefits of which have already reached both borrowers and depositors,” said Adhil Shetty, CEO of Bankbazaar.

 

Relief for home loan borrowers

 

Shetty explained that for borrowers, the difference is clear. “On a Rs 50 lakh loan for 20 years, the drop from 8.5% to 7.5% translates into savings of around Rs 7.5 lakh. If customers retain their earlier EMI levels, the savings can go up to Rs 15.4 lakh over the tenor,” he said. He added that with banks holding spreads steady and festive discounts on processing fees, “this is one of the best times in recent years to invest in a home.”

 

Developers agreed that the mix of RBI stability and GST rate cuts is encouraging. “People paying off home loans will keep paying the lower rates from earlier this year. Plus, with GST cuts making building supplies, upkeep, and property-related items cheaper, housing is becoming more affordable overall,” said Anurag Goel, Director at Goel Ganga Developments.

 

“This stability comes at a crucial time when consumer confidence is improving, and demand in the housing sector, particularly in emerging corridors like Golf Course Extension Road, Dwarka Expressway, and Faridabad, is witnessing strong traction,” said Raghav Malhotra, Director, PRIME Developments.

 

“Because of all this, people’s confidence in the real estate market will probably grow,” said Jetaish Gupta, Founder and Director, Adore Group.

 

Sector caution

 

Not everyone was upbeat. Anuj Puri, Chairman of ANAROCK Group, pointed out that while stability sustains sentiment, it doesn’t improve affordability. “This stability means existing home loan borrowers won’t see any immediate EMI changes, while new borrowers will find loan interest rates holding steady,” he said.

 

According to ANAROCK data, Q3 2025 residential sales across India’s top seven cities fell 9% year-on-year to 97,080 units. However, overall sales value rose 14% to INR 1.52 lakh crore, showing stronger demand for premium and mid-segment homes.

 

Puri noted the GST rate cuts will help affordability, especially in lower price segments. “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. This could save homebuyers INR 1-3 lakh, particularly in affordable and mid-segment housing where cost sensitivity is high.”

 

How home loan borrowers will be affected

 

RBI data show that the Weighted Average Lending Rate (WALR) for fresh loans fell by 58 basis points between February and October 2025, reflecting strong transmission of the year’s 100-basis point cut.

 

“Most banks have kept their spreads constant, so for home loan borrowers with a good credit score, this reduction is apparent. Best rates fell from 8.4% in January to 7.35% in September,” said Shetty.

 

A 100-basis point fall in interest rates has meant savings of Rs 14,935 per lakh for a 20-year loan. Customers willing to keep EMIs unchanged can save even more over the tenure.

 

“Additionally, the festive offers on lower or no processing fee and special interest rates add to the appeal,” Shetty added. “While the recent GST reduction does not directly affect home buying or home loans, it has given a psychological boost to consumers, and coupled with the other festive offers, it has made buying a house more attractive.”

 

What steps can borrowers take now

 

• Check whether your loan is repo-linked or MCLR/base rate

• If you’re paying higher interest, consider switching to a repo-linked loan

• Compare rates across banks, especially if you have a strong credit score

• Think about part-prepaying your loan to reduce interest burden

• Maintain a good credit score to get better offers

 

“Those still on MCLR or base rate loans should consider switching to repo-linked loans for quicker benefits,” said Shetty. “Part-prepaying during a low-rate environment can significantly reduce your overall interest and loan tenure.”