Mumbai Housing Becomes Affordable as RBI Rate Cuts Drop EMI Burden Below 50% for First Time in History

Financial experts reported that Mumbai's housing market witnessed a historic shift in the first half of 2025, with the city's EMI-to-income ratio dropping below the critical 50% threshold for the first time ever. The development came as a result of aggressive repo rate cuts by the Reserve Bank of India, which reduced the financial burden on homebuyers in India's most expensive real estate market.

Industry analysts noted that rising property prices and affordability challenges had long plagued Mumbai's housing sector, making it the least accessible market for middle-class buyers across major Indian cities.

Monetary Policy Changes Drive Housing Market Transformation

Central Bank's Aggressive Rate Reduction Strategy

The Reserve Bank of India implemented a series of monetary policy adjustments that significantly impacted the housing finance sector. Officials confirmed that the central bank reduced its repo rate by 100 basis points between February and June 2025, including a substantial 50 basis point cut in June, bringing the benchmark rate down to 5.5%.

Banking sector experts explained that these lower base rates translated directly into cheaper home loans, providing relief to both new borrowers and existing loan holders. The rate cuts were designed to stimulate economic growth while making home loan approval processes more favorable for applicants.

Mumbai's Affordability Breakthrough

According to Knight Frank's Affordability Index, research showed that the EMI-to-income ratio in Mumbai declined from 50% in 2024 to 48% in the first half of 2025. Real estate consultants emphasized that this marked the first time ever that Mumbai slipped below the critical 50% unaffordability threshold, making the city relatively more accessible compared to previous years.

Market observers noted that this shift represented a significant milestone for Mumbai's housing sector, which had traditionally required households to dedicate more than half their income to mortgage payments. The change was expected to boost buyer confidence and stimulate property sales in the financial capital.

Comparative Analysis Across India's Major Housing Markets

Industry research revealed how Mumbai's housing affordability compared with other major Indian cities in the first half of 2025. The data demonstrated the varying degrees of housing accessibility across different metropolitan areas.

Real estate analysts pointed out that while Mumbai remained the least affordable among the top eight cities, its movement below the 50% marker signaled a positive affordability shift that could reshape the city's housing dynamics.

Market Impact and Future Implications

Housing finance experts suggested that the improved affordability ratio could lead to increased home buying activity in Mumbai. The development was particularly significant for middle-income households who had previously been priced out of the market due to high EMI burdens.

Industry stakeholders anticipated that this trend could encourage more affordable housing initiatives and potentially influence property developers to launch more mid-segment projects to cater to the newly accessible buyer segment.

Market researchers also noted that the improved affordability could impact rental yield calculations for investors and influence overall real estate investment patterns in Mumbai's property market.

The development came at a time when infrastructure developments were driving Mumbai's connectivity and economic growth, potentially creating a favorable environment for sustained housing market improvement.