In a move poised to boost housing demand and reduce borrowing costs, several of India’s top commercial banks have announced cuts in lending rates following the Reserve Bank of India’s (RBI) recent repo rate reduction. On June 6, the RBI lowered the benchmark repo rate from 6% to 5.5% in a bid to spur economic growth, particularly in key sectors such as housing and MSMEs.
Leading banks including HDFC Bank, Canara Bank, and Bank of Baroda have swiftly responded by reducing their marginal cost of funds-based lending rates (MCLRs), passing on the benefits to borrowers. The rate cuts are expected to lower home loan EMIs, bringing relief to both prospective and existing borrowers under floating-rate loan schemes.
The State Bank of India (SBI), the country’s largest lender, also moved to ease borrowing costs, slashing its lending rates by 50 basis points. Effective June 15, SBI’s repo-linked lending rate (RLLR) now stands at 7.75%, while its external benchmark-based lending rate (EBLR) has dropped from 8.65% to 8.15%. However, other major public sector lenders such as Punjab National Bank (PNB) have opted to keep their lending rates unchanged for now, reflecting a more cautious approach.
The overall reduction in borrowing costs is being welcomed by industry leaders and analysts, who believe the move will rekindle buyer interest, especially in the affordable and mid-income housing segments.
Industry Welcomes Move
Prashant Sharma, President of NAREDCO Maharashtra, praised the development, saying, “The interest rate correction is a timely booster for the housing sector. Reduced EMIs will not only revive fence-sitters but also give impetus to end-user-driven demand. We expect this to translate into improved sales velocity, particularly in Tier-I cities like Mumbai and Pune.”
Echoing this sentiment, Nishant Deshmukh, Founder and Managing Partner of Sugee Group, said, “The reduction in lending rates offers much-needed and immediate relief to homebuyers, particularly those dependent on home loans to realise their dream of homeownership. Lower EMIs ease financial pressure and make property ownership more accessible. This positive shift will help restore buyer confidence and support long-term growth in the real estate sector.”
Shraddha Kedia-Agarwal, Director at Transcon Developers, added, “The revised rates will allow homebuyers — especially first-time buyers — to re-evaluate their budgets and invest in homes with better amenities and lifestyle offerings. For developers, this could catalyse fresh enquiries and faster conversions.”
Outlook for the Sector
With lending rates now trending downward and broader macroeconomic indicators showing signs of stability, the real estate sector appears poised for a more broad-based recovery. Market experts believe this shift could be the start of a sustained revival, balancing affordability with aspirational housing needs.
The RBI’s move, coupled with proactive rate revisions by banks, is expected to stimulate demand, boost market sentiment, and strengthen the foundation for long-term growth in India’s housing sector through 2025 and beyond.
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