RBI cuts repo rate by 25 bps: What this means for the real estate sector

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) reduced the repo rate by 25 basis points to 5.25% from the earlier 5.5%. A repo rate cut trims the cost of borrowing for commercial banks, leading to lower interest rates on loans, including home loans. This is an indirect boost for the real estate sector by increasing affordability for prospective homebuyers, especially in the affordable and mid-income segments.

Here's a look at how real estate industry responded to the RBI repo rate cut.    

Parveen Jain, President, NAREDCO said, "For real estate, lower interest rates make home loans more affordable, which supports homebuyers and strengthens demand. The positive impact will extend to allied industries as well, helping generate more employment. In Tier 2 and Tier 3 cities, this move can further boost interest among both developers and buyers." 

Ramani Sastri - Chairman & MD, Sterling Developers emphasised on the need for the transmission of the reduced rates to be faster in order to benefit the buyers in the sector. 

"The rate cut would strengthen market confidence and also act as a strong signal of policy support for the real estate sector and the broader economy. However, for the intended benefits to materialise, the transmission of the reduced rates must also be faster, ultimately benefiting the real estate sector and contributing positively to overall economic expansion. A supportive interest-rate environment will play a crucial role in sustaining homebuyer confidence in the coming year," said Sastri. 

Pyush Lohia, Director, Lohia Worldspace said, "This benefits both developers and homebuyers, providing a predictable environment for decision-making. The upward revision of GDP growth to 7.3% is particularly positive for Tier-2 markets, where rising aspirations meet the need for affordable, quality housing. Lower borrowing costs in these cities create opportunities for first-time buyers while giving developers the confidence to plan and execute long-term, sustainable projects rather than short-term cycles."

Rohit Kishore, CEO, Hero Realty said, "The RBI repo rate cut is a steady and reassuring move for the real estate sector. Stable borrowing costs will benefit both homebuyers and developers. For buyers, it means continued lower EMIs and easier access to home loans, which can encourage more people to buy homes. For developers, the sustained interest rates will help manage costs and finish projects on time. This policy continuity will boost confidence in the market and maintain demand for homes and office spaces. Stable rates and recent liquidity support from the central bank help developers manage project costs, push new launches, and keep housing supply robust. The continuation of favourable credit conditions and the steady pace of earlier rate cuts also maintains affordability, especially in the mid- and affordable housing segments, and underpin a cautiously optimistic outlook for the market.”