Top 10 Best Private Banks in India List 2025
January 09, 2025
Any reduction at this stage will benefit India’s affordable housing sector, which is currently reeling from skyrocketing property prices.
New Delhi, January 28, 2026: The Reserve Bank of India (RBI) may reduce its benchmark lending rate by another 25 basis points in its monetary policy meeting scheduled for February 6, says Bank of America. Based on “forward inflation rates staying benign and growth likely softening”, this could be the last reduction in the repo rate in the ongoing easing cycle, the foreign brokerage said on January 27.
In an earlier report, IIFL Capital had also said that since the gap between the repo rate and core inflation remains elevated, there is scope for further monetary easing, especially as growth is showing signs of cooling. Annual retail inflation was at 1.33% in December, below the Reserve Bank’s target range of 2% to 6% for the fourth straight month. Meanwhile, annual growth in economic activity showed signs of moderation, hitting 10.3 per cent in December, down from 10.7 per cent in November.
In 2025, the banking regulator reduced the repo rate, at which it lends money to scheduled banks in India, by a cumulative 125 basis points (bps), bringing it down to 5.25%.
As a result, leading public and private banks in the country are currently offering home loans at an annual interest rate of 7.25%. Further rate reduction would bring this down to sub-7% levels, providing a major relief to homebuyers amid a tremendous spike in property prices that has made homeownership prohibitive for a large part of the country’s over 1.4 billion people.
Across the country’s prime residential markets, property prices increased between 7 and 19% in the past year, putting further stress on housing affordability in the world’s fifth-largest economy.
In fact, according to Square Yard’s recently released report titled, From Aspiration to Reality: The Cost of Owning a 3BHK in India, the average cost of a new 3BHK across India’s top five metropolitan cities today stands at INR 2.7 crore. Consequently, it would take an average of 12 years for a buyer earning INR 23 lakh annually to purchase a 3BHK home in any of India’s five prime residential markets.
