Borrowers of new and existing home loans and fresh auto loans will benefit from the RBI’s decision to cut policy rate once again, even as it could spell trouble for savers and retirees, as they may see interest rates on fixed deposits slide further.

All eyes would now be on individual banks to act on the repo rate cut. Adjustments in home and auto loans and term deposit rates will play out in weeks to come, depending on the balance sheet of each bank.

In response to the cumulative 1 per cent cut in the policy repo rate (February-October), the weighted average lending rate of scheduled commercial banks has declined by 0.69 per cent for fresh rupee loans and 0.63 per cent on outstanding rupee loans. On the deposit side, the weighted average domestic term rate on fresh deposits has declined by 1.05 per cent, while that on outstanding deposits has softened by 0.32 per cent. One-year term deposit now fetches 6.25 per cent from SBI, even as senior citizens earn 0.5 per cent more.

Home loans

Real estate experts said the rate cut would particularly help the affordable segment of buyers who have paused their purchase decision amid rising home prices.

With average housing prices across the top 7 cities having risen by notable double-digits (10 per cent) in 2025, this rate cut provides a critical cushion to affordability, remarked Anuj Puri, chairman of Anarock Group.

Samantak Das, chief economist of JLL, said, “The move is the catalyst needed to revive purchasing power and activate first-time affordable and mid-market homebuyers who have been waiting on the sidelines, transforming fence-sitters into active buyers.”

Sushil Mohta, president of Credai Bengal and chairman of Merlin Group, noted that the real estate market of Bengal, dominated by the affordable segment, would benefit from the rate cut.

Given the high penetration of external benchmark-linked loans, the transmission to homebuyers is expected to be quick, providing tangible EMI relief.

The rate cut will not only invigorate demand in the top metro areas but also boost the housing markets in Tier 2 and Tier 3 cities, Das observed.