IGI Logo

Every alternate month, the Reserve Bank of India's Monetary Policy Committee (MPC) meets to assess the country's macroeconomic conditions and decide on key policy rates aimed at maintaining inflation within target and supporting economic growth.

Various sectors of the economy keep a close watch on the MPC’s decisions, as shifts in policy rates influence borrowing costs, investment sentiment, and overall demand. For the real estate sector, in particular, changes in interest rates directly affect home loan affordability and consumer confidence.

The housing sector has witnessed renewed momentum following the cumulative 1% reduction in the repo rate between February and June 2025, according to real estate experts. The decline in home loan rates has improved affordability and revived buyer sentiment across key markets.

With borrowing costs coming down, industry leaders expect housing demand to remain strong. Many believe that with inflation under control, the RBI may have room to provide further support to boost the real estate sector.

Mr. Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd., said, “With inflation staying well below the RBI’s target, there is still room for a consecutive fourth cut in the repo rate to boost consumption in the economy. A 25-bps cut in the repo rate would definitely give a further boost to the real estate market, as it would bring the repo rate down by 125 bps from the previous year. With several commercial banks already offering loans below 8 percent, an additional repo rate cut would further ease credit and prompt end-users to advance their home buying decisions.

Having said that, it would be important for the RBI to carefully assess overall economic conditions before making a decision. Even if the RBI decides to keep the rates unchanged, the current low-interest rate environment is already providing strong support to housing demand. Positive buyer sentiment, better affordability, and easy loan availability are together helping the real estate market maintain its growth momentum.”

Mr. Jash Panchamia, Executive Director, Jaypee Infratech Limited, said, "The RBI had adopted a neutral stance in its previous policy review, and it remains to be seen whether the central bank will go for a rate cut or maintain the status quo. With inflation currently at a six-year low, a 25-basis-point cut in the repo rate would be encouraging for the overall economy. The real estate sector, having already benefited from the previous three consecutive rate cuts, would see a further boost in demand and buyer confidence if another cut is announced.

Such a move would reinforce the current growth momentum in the housing market. It would support end-users and first-time homebuyers by lowering borrowing costs and making home ownership more accessible across segments. Overall, the real estate sector remains well-positioned to benefit from a supportive rate regime."

Mr. Ashok Kapur, Chairman, Krishna Group and Krisumi Corporation, said, “The housing sector has already been benefiting from the cumulative 100 bps cut in the repo rate, as reflected in the rising consumer demand driven by lower home loan interest rates. If the RBI decides to further reduce the repo rate by 25 bps in its upcoming policy review, it would give an overall boost to the economy and further support demand across sectors, including real estate.

Lower home loan rates always give an impetus to housing demand by improving affordability and encouraging more buyers to enter the market. With positive consumer sentiment prevailing, the housing sector is well-positioned to maintain its growth momentum, driven by strong end-user interest and improved access to credit.”

Mr. Raoul Kapoor, Co-CEO, Andromeda Sales and Distribution Pvt Ltd, said, “So far this year, the RBI has cumulatively reduced the repo rate by 100 basis points across the last three policy reviews. While the first two meetings each saw a 25-basis point cut, the central bank surprised the market in the last MPC by delivering a sharper-than-expected 50 basis point reduction.

Looking ahead, it is unlikely that the RBI will opt for another aggressive rate cut in the upcoming review. However, with inflation remaining below expectations, geopolitical tensions easing, and the domestic economy showing signs of resilience, a moderate 25 basis point cut remains a strong possibility. If implemented, such a move could provide a further boost to retail borrowing—especially timely with the festive season on the horizon, traditionally a high-demand period for consumer spending and housing purchases.”

Mr. Vikas Bhasin, MD of Saya Group, said, “We are hopeful that the RBI will continue the rate cut cycle and may opt for another reduction of 25–50 basis points in the repo rate in the upcoming MPC meeting.

The cumulative rate cut of 100 basis points this year has already led to a significant reduction in home loan rates for borrowers. A further rate cut will make home loans more affordable and enhance the loan eligibility of home buyers. This will benefit buyers across all segments—from affordable to luxury—throughout the country. We expect this to further boost the demand for homes in the coming months.”

Mr. Sushil Bedarwal, CMD, Bedarwal Group, said, “The RBI’s cumulative repo rate cut of 100 basis points so far this year has brought substantial relief to homebuyers, particularly in the affordable and mid-income housing segments. These categories are largely driven by end-users with limited budgets, making lower interest rates a critical factor in improving affordability.

Given the commentary in recent MPC meetings—where the RBI Governor has clearly indicated room for further easing—we anticipate another 25-basis point rate cut in the upcoming review.

We also hope that banks will promptly pass on the benefits of any further reduction to borrowers. Lower home loan rates directly enhance the purchasing power of aspiring homeowners, helping many take a decisive step toward owning their dream home.”

Above views are of the author and not of the website kindly read disclaimer