NEW DELHI: The Reserve Bank of India‘s (RBI) six-member Monetary Policy Committee (MPC) on Friday cut the repo rate by 25 basis points to 6.25 per cent. This comes after last rate reduction in May 2020.
Real estate experts feel this rate cut will have a positive impact on the overall sector, making home loans more affordable and increasing demand for housing.
G Hari Babu, national president, NAREDCO said, “With lower interest rates, we expect to see increased sales, improved liquidity, and a reduction in the inventory of unsold homes. This, in turn, will encourage developers to launch new projects, creating new opportunities for homebuyers and investors. The rate cut will also benefit the commercial real estate segment, as lower borrowing costs will make it more attractive for businesses to invest in office spaces and other commercial properties.”
Manoj Gaur chairman, CREDAI National said, “Coupled with the income tax rebate, and tax concessions on second home and rental income, it will not only infuse liquidity in the market but also leverage the real estate sector’s investment potential.”
Boman Irani, President, CREDAI National said, ” As inflations continues to remain a notch higher than the medium-term target of 4%, the central bank has its task cut out – Contain inflation, inject liquidity into banking system and cut repo rates in the coming quarter too. While the current cut may have a limited direct impact, we anticipate that a further rate cut in the next MPC meeting will provide stronger impetus to overall demand, accelerating housing sales, particularly in the mid-income and affordable segments.”
“A lower interest rate directly benefits individuals with floating-rate loans, as both new and existing borrowers will see a decline in their monthly payments. This enhances housing affordability and fuels demand in the real estate sector,” said Ramesh Menon, founder director, Delhi Consortiums.
The rate cut is also expected to boost sentiments of the industry. “On the one hand, it will make purchasing properties cheaper it will also encourage consumption. But more than everything, this step will boost market sentiments and lead us to hope for more such rate cuts in the future,” said Udhav poddar, CMD, Bhumika Group.
This move is also expected to give a boost to the demand and supply of affordable housing segment feel builders. Venkatesh Gopalakrishnan, Director Group Promoter’s Office, MD – Shapoorji Pallonji Real Estate (SPRE) said, “this development is a significant boost, particularly for affordable and mid-segment housing, where demand is steadily rising. Lower borrowing costs will further enhance home loan affordability, bringing the dream of homeownership closer for many aspiring buyers.”
Amit Bhagat, co-founder, CEO and MD, ASK Property Fund echoed similar sentiments, “Home sales for the affordable and lower mid-income segment have been affected by declining affordability. The impact of increasing prices in the recent past and elevated interest rates have impacted the housing sales in this segment, as it is quite sensitive to movements in interest rates and prices. A rate cut was definitely needed to uplift sentiment and define a direction for the near future.”
Shishir Baijal, chairman and managing director, Knight Frank India hopes that the interest rate cuts will be passed on to consumer and the home loan rates become more attractive which combined with the earlier announced tax incentives spur residential demand across the different price brackets, but especially in the below Rs 50 Lakh category, which has seen continued weakening of demand.
Pradeep Aggarwal, Founder & Chairman, Signature Global (India) said, “Lower borrowing costs will improve home affordability, strengthening buyer sentiment, particularly in the mid-income and premium housing segments. Historically, reduced interest rates have triggered an upswing in housing demand, benefiting both homebuyers and developers. Additionally, improved credit access will support developers in securing funding for project execution, ensuring steady supply and timely deliveries.”
Here’s how other real estate stakeholders reacted:
Ashish Puravankara, MD, Puravankara Group
The Monetary Policy Committee’s unanimous decision reflects its focus on maintaining a durable alignment of inflation with the target while supporting growth. It complements the government’s fiscal policy, tax reliefs, and investment-driven measures announced in the recent Union Budget. Today’s decision will also have a large impact on housing demand in the country. With control of inflation, we expect more cuts in the upcoming meetings, further boosting demand, especially in mid-segment housing.
Anshul Jain, Chief Executive, India, SEA & APAC Tenant Representation, Cushman & Wakefield
This move is going to help revive growth in consumption, and it will also help reduce borrowing cost for the interest rate-sensitive housing sector, particularly in the affordable and mid-income category homes. The recent measures in the Union Budget along with the RBI policy decision has offered a much needed stimulus for sustained growth in the residential market.
Niranjan Hiranandani, Chairman, NAREDCO
After a period of steadiness in the repo rate, this long-awaited and strategic move comes at a crucial time. As inflation is now under control, the fiscal deficit remains moderate, and economic growth is expected to accelerate steadily, the reduction in the repo rate signals a renewed sense of resilience. Additionally, it assures us that despite external geopolitical uncertainties, our domestic economic climate keeps markets efficient and demand robust. Combined with the tax benefits announced in the FY26 budget for the middle class, this policy change will boost sales velocity. Thus, lowered interest rates will further nudge homebuyers to buy an ownership home with an upgraded lifestyle.
Anuj Puri, Chairman, ANAROCK Group
Many first-time homebuyers who had been hesitating to take the plunge are likely to make their move now as home loan rates will reduce – as long as banks pass on the key benefits to buyers.
Domnic Romell, President, CREDAI-MCHI
With inflation projected at 4.2% for FY26 and economic growth expected to moderate, it is imperative that banks pass on the benefits of this rate cut to borrowers by reducing home loan interest rates. A reduction in EMIs will significantly boost housing demand, particularly in urban centers like the Mumbai Metropolitan Region (MMR).
Rohit Gera, Managing Director, Gera Developments
A lower interest rate regime enhances home affordability and stimulates demand, particularly in the mid-income and affordable housing segments.
However, the real impact will be felt only if banks swiftly pass on these benefits to borrowers through reduced home loan interest rates. This will not only empower aspiring homebuyers but also support the government’s vision of ‘Housing for All’ and accelerate overall growth in the real estate sector.
Prashant Sharma, President, NAREDCO Maharashtra
This rate cut will provide much-needed relief to existing and prospective homebuyers, boosting housing demand and enhancing affordability. Additionally, we expect banks to ensure swift transmission of the reduced rates to borrowers, allowing a direct impact on home loan interest rates. The real estate sector has been a key driver of economic growth, and lower borrowing costs will contribute positively to the overall industry sentiment.
Manik Malik, CFO, BPTP
Developers will see financial relief through lower borrowing rates, enabling smoother project execution and keeping construction costs manageable. For homebuyers, this reduction in the repo rate translates into lower house loan EMIs, making homeownership more accessible. This could reignite buyer sentiment and boost demand in both the residential and commercial real estate markets.
Girish Kousgi, MD & CEO, PNB Housing Finance
The RBI’s decision to cut the repo rate by 25 basis points the first rate cut since 2020 is a significant move that will provide much-needed relief to home loan borrowers and give a strong boost to the housing sector. Lower interest rates directly enhance affordability, making home loans more accessible for aspiring homeowners and first-time buyers.
