RBI Likely To Cut Rates Again, Affordable Housing To Get Big Boost

New Delhi: The Reserve Bank of India (RBI) is expected to cut the key repo rate by 25 basis points this Friday, June 6. This move could make home loans cheaper and give a big push to the affordable housing market. Experts say this rate cut is likely because inflation is low and the economy is growing at 6.5 per cent this financial year (FY25).

Shishir Baijal, Chairman and MD of Knight Frank India, said the rate cut is supported by good liquidity in the market. Currently, there is a surplus of Rs 3.6 lakh crore. This means banks have more money to lend. Also, the bond market is showing trust in RBI’s management, as G-sec yields have gone down.

If this rate cut happens, the total cut in repo rate this year would be 75 basis points. But experts believe just cutting the rate is not enough. Banks must also pass on the benefit to people by lowering loan rates quickly.

Baijal added that some banks have already started to lower their lending rates, but the changes are still small. Now that there is more money in the system, banks can cut loan rates faster. This will help people borrow more easily and also boost private investments. All of this will help the Indian economy grow.

According to Crisil, RBI may reduce the repo rate by another 50 basis points during this financial year (FY26). Lending rates by banks have already started going down. This will help domestic demand grow.

Experts say this is very important for affordable housing. In this segment, people usually spend a big part of their income on loan EMIs. So, even a small cut in loan rates can help more people buy homes. Lower EMIs make homes more affordable, which can increase sales in this segment.

(With agency inputs)