A rate cut by the RBI has been long anticipated, but in the last monetary policy meeting, instead of reducing the repo rate, the central bank opted to lower the Cash Reserve Ratio (CRR). This move provided some relief by injecting liquidity into the market. However, given the current domestic and global economic conditions, there is strong anticipation of a repo rate cut of 25 to 50 basis points in tomorrow’s MPC meeting.

A rate cut of up to 50 basis points could provide significant relief to borrowers. Currently, home loan interest rates hover between 8.5% and 9% per annum. For instance; a 50 bps reduction on a 20-year home loan of ₹50 lakh could lower the EMI by approximately ₹1,600, making homeownership more affordable. Coupled with the additional savings from revised tax slabs, this could enhance loan eligibility and repayment capacity in coming fiscal, encouraging more prospective homebuyers to take the plunge into property ownership.

A modest 25 bps rate cut in tomorrow’s monetary policy meeting seems highly likely, given the pressures on GDP growth, inflation remaining within a comfortable range for the past few quarters, and prevailing tight liquidity conditions. Additionally, global factors such as trade dynamics and financial market trends further support the case for a rate reduction.

A rate cut would not only enhance liquidity but also stimulate consumption and purchasing power, ultimately fueling economic growth. Lower borrowing costs could give significant boost to the real estate sector, as reduced home loan interest rates serve as a major incentive for prospective homebuyers. This, in turn, could drive higher demand for housing, benefiting both end-users and investors alike