Repo rate cut to boost property investment, fuel housing demand as home loan EMIs to go down, say real estate experts

Market observers said that a rate cut would not only enhance liquidity but also stimulate consumption and purchasing power, ultimately fuelling economic growth. Lower borrowing costs could give significant boost to the real estate sector, as reduced home loan interest rates serve as a major incentive for prospective homebuyers.

Anshul Jain, Chief Executive, India, SEA & APAC Tenant Representation, Cushman & Wakefield, said that the RBI’s decision to cut the repo rate by 25-basis points to 6.25 percent is a well-timed and much-needed move. With CPI inflation easing and Q2-FY25 GDP growth slowing, this was an opportune moment for the RBI to initiate rate cuts.

“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,” Jain said.

Boman Irani, President, CREDAI National, said that the RBI’s decision to reduce the repo rate by 25 basis points supplements recent announcements in the budget aimed at boosting spending and spur economic growth.

“This supportive monetary policy was imperative, especially after the recent 50-basis-point reduction in the Cash Reserve Ratio (CRR), which has already injected significant liquidity into the banking system…These measures signal a robust framework for sustainable growth, fostering confidence among homebuyers, developers, and investors alike," he said.

Sahil Lakshmanan, Chief Business Officer, CarePal Money, said that the move would provide much-needed relief to borrowers, making home, auto, and personal loans more affordable.

“Lower EMIs would boost consumer spending, while businesses could benefit from reduced borrowing costs, potentially driving investment and job creation,” he said.

The RBI had last reduced the repo rate by 40 basis points to 4 percent in May 2020 to help the economy tide over the crisis during Covid-19 pandemic. The RBI, in May 2022 started hiking repo rates in view of the Russia-Ukraine war. The repo rates remained unchanged at 6.50 percent for two years.

Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd, said that the move would shape India's economic momentum and in the real estate sector, such a policy shift could lead to more affordable home loans, improving housing affordability and stimulating demand—especially in the mid and premium segments.

“This could accelerate capital deployment in infrastructure and urban development, further boosting real estate growth. Given India’s rapid urbanization and rising aspirations for homeownership, a proactive monetary policy can serve as a catalyst for long-term economic resilience and sustained real estate expansion,” he said.

Prateek Mittal, Executive Director, Sushma Group said that lower interest rates will make home loans more affordable, while increased disposable income will enhance buyers’ purchasing power. This combination is set to drive demand, particularly in emerging markets.

Manju Yagnik, Vice Chairperson of Nahar Group and Senior VP, NAREDCO, Maharashtra, said that the move is expected to drive demand for housing, boosting market activity and encouraging more people to invest in real estate.

Developers will benefit from easier access to funds, helping them complete projects faster and meet the rising demand, she said.