Home loans get cheaper with RBI cutting rates by 25 bps

Mumbai: Home loan and other borrrowings are set to get cheaper with the Reserve Bank of India reducing the repo rate by 25 basis points to 6.25% citing lower inflation and growth. The central bank revised both the growth and inflaton forecast for FY26 by 20 basis points to 6.5% and 4% respectively.

The monetary policy committee (MPC) unanimously voted to reduce the repo rate and change the stance of the moneary policy from neutral to accomodative. Explaining the change in stance in his address, RBI governor, Sanjay Malhotra said “The stance of monetary policy signals the intended direction of the policy rates going forward accordingly with respect to the policy rate, which is the mandate of the MPC. Today's change in stance from neutral to accommodative means that going forward, absent any shocks, the MPC is considering only two options, that is status quo or a rate cut."

The governor said that the lower growth forecast reflects the impact of global trade and uncertainities arising out of global tariffs. He said that inflation pressures have eased because of sharp drop in food and global crude oil prices, which today stand at $60 per barrel.

“There is a decisive improvement in the inflation outlook, as per projections, there is now a greater confidence of a durable alignment of headline inflation with the target of 4% over a 12 month horizon,” said Malhotra.

"The uncertainties regarding Rabi crops have abated considerably, and the second advanced estimates point to a record wheat production and higher production of key pulses over that last year, along with robust wheat arrivals, this is expected to set the stage for a durable softening of food prices,” said Malhotra.


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