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The rate cut is aimed at making borrowing more attractive, potentially spurring investment in real estate and boosting housing demand.
As part of its ongoing efforts to stimulate consumption and accelerate economic growth, the Reserve Bank of India (RBI) today reduced the repo rate by 25 basis points to 6%. The move is aimed at making borrowing more attractive, potentially spurring investment in real estate and boosting housing demand.
Commenting on the rate cut, industry experts said home loan borrowers may not see much meaningful or immediate interest rate relief. Banks have not transmitted earlier MPC rate cuts to borrowers because of higher funding costs, pressure on net interest margins, higher NPAs, and a cautious lending climate.
“If banks do pass on the benefits of the last two rates cuts, it will be a boost to homebuyers, particularly for those eyeing affordable housing. Many first-time homebuyers who had been hesitating to take the plunge may make their move if home loan rates reduce,” said Anuj Puri, Chairman, ANAROCK Group.
It may be noted that housing prices have risen across the top 7 cities in the last one year. As per ANAROCK Research, Q1 2025 saw average housing prices rise by anywhere between 10% and 34% in the top 7 cities, with NCR and Bengaluru recording the highest 34% and 20% jump, respectively. The average prices in top 7 cities collectively stood at approx. Rs 7,550 per sq. ft. in Q1 2024-end, while in Q1 2025-end it increased to approx. Rs 8,835 per sq. ft. – a collective increase of 17% annually.
Whatever be the case, a majority of developers, however, hailed the rate cut, and said by making home loans more affordable, it will give a boost to the realty sector.
Aman Trehan, Executive Director, Trehan Iris, said, “The RBI decision to reduce the repo rate by 25 basis points to 6% is a strategic move that holds significant promise for the real estate sector. Moreover, lower borrowing costs are anticipated to make home loans more affordable, thereby enhancing the purchasing power of potential homebuyers and stimulating demand across various housing segments. Additionally, the reduction in interest rates is likely to ease financial constraints for developers, facilitating the timely completion of ongoing projects and encouraging the initiation of new developments.”
This proactive approach is expected to improve housing affordability by reducing borrowing expenses, which will, in turn, boost demand in the residential real estate sector.
“The anticipated decrease in home loan interest rates is expected to bolster consumer confidence, encouraging prospective buyers to invest in their dream homes. Furthermore, the RBI’s projection of a 6.5% GDP growth for 2025-26 reflects a positive economic outlook, which is likely to invigorate the real estate sector. We believe this initiative will foster growth and contribute positively to the broader economy,” said Ashish Sharma, AVP Operations, Brahma Group.
Ashish Agarwal, Director, AU Real estate, said, “The rate cut will significantly ease the financial burden on homebuyers by reducing their loan EMIs, making homeownership more affordable and accessible. This step is expected to reignite buyer interest, boost housing demand, and improve liquidity in the market. For developers, lower borrowing costs will facilitate smoother project execution and encourage new launches.”
Sanjay Sharma, Director, SKA Group, said, “The back-to-back 25 bps repo rate cut reflects a clear intent to stimulate economic activity, with positive implications for the real estate sector. Lower interest rates will enhance home loan affordability, attract more homebuyers, and support demand across segments. This is particularly impactful at a time when inflationary pressures are not much of a concern. We remain optimistic about continued policy support to keep the housing market on an upward trajectory.”
“Lower interest rates are expected to enhance credit affordability, continuity of demand for retail loans and encouraging business expansion and consumer spending. This monetary easing is likely to translate into increased leasing activity and could certainly help in new project launches, reflecting renewed investor interest and stronger occupier confidence across key markets,” said Harinder Singh Hora, Founder Chairman, Reach Group.
The rate cut also aligns well with the current macroeconomic situation.
“With inflation showing signs of easing and growth requiring a gentle push, this cut will act as a catalyst for demand revival—especially in interest rate-sensitive sectors like real estate. Lower borrowing costs will not only improve homebuyer sentiment, but also ease the financial burden on developers. This policy shift reaffirms RBI’s commitment to a growth-supportive environment while maintaining inflation within its target range,” observed Mohit Goel, MD, Omaxe Ltd.
Saurab Saharan, Group Managing Director, HCBS Developments, said, “Bringing the repo rate down to 6% is likely to open up new opportunities for the luxury housing market. Lower interest rates enhance the purchasing power of high-net-worth individuals who are often waiting for the right moment to invest. This move will not only speed up decision-making among discerning buyers but also create room for innovation and bold offerings from developers aiming to capture premium demand.”
“This policy shift will further enhance housing affordability, especially in urban and aspirational micro-markets, at a time when investor confidence and end-user interest are both gaining traction. Smartworld, as a brand focused on creating future-ready luxury communities, sees this as a pivotal moment for both homeownership and real estate investment,” said Ashish Jerath, President- Sales & Marketing, Smartworld Developers.
Sandeep Agarwal, Executive Director – Finance & Group CFO, Elan Group, said, “The real estate sector is poised for accelerated growth by the RBI’s decision to reduce the repo rate by 25 basis points to 6% as it comes at a favourable time for the sector. We are highly anticipating that this move will significantly enhance home affordability, strengthen buyer confidence, and drive the ongoing momentum in residential demand. We also expect a positive increase in urban housing demand where buyers, particularly those who desire upward mobility and are seeking long-term value and lifestyle upgrades. This is an ideal moment for both end-users and investors to capitalize on high-potential real estate opportunities with consumer sentiment turning optimistic and borrowing costs easing.”
Source : FE
