April Shower: Real Estate Gets Booster Shot as RBI Cuts Repo Rate by 25 BPS

Noida, April 9, 2025: The decision of the Reserve Bank of India’s Monetary Policy Committee (MPC) on Wednesday to cut the repo rate by 25 basis points (bps) to 6 per cent has been welcomed all around, and by the real estate sector in particular. Real estate has got much needed warmth again this year from the RBI whose rate cut is the second consecutive one of 2025. The decision, taken at the meeting of the six-member MPC, paves the way for reduction in interest rates on home loans as well as vehicle loans and bank deposits. The policy stance of the central bank has now turned from neutral to accommodative, pointing to more repo rate cuts down the line.

The RBI decision comes amid tumult in world markets catalysed by reciprocal tariffs imposed by US President Donald J. Trump. The impact of the upped tariffs is expected to show up in inflation, trade friction and a reduced global growth. “Global economic outlook is fast changing. FY26 has started on an anxious note and some global trade frictions are coming true,” RBI Governor Sanjay Malhotra is reported to have said. Social media posts of top news agencies quoted him as saying that the MPC “voted unanimously to reduce the policy repo rate by 25 basis points to 6% per cent with immediate effect”.

It was in February that the repo rate was cut by 25 bps to 6.25 per cent, a first in five years. With this successive 25 bps cut, borrowers are expected to get relief of like magnitude from banks on home and other loans.

Here’s how real estate leaders reacted to the cut:

Anshuman Magazine, Chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE: “The RBI’s decision to reduce the repo rate is significant for the economy amid ongoing tariff concerns and global headwinds. This timely action aims to relieve liquidity constraints and boost business confidence. The rate cut is expected to boost investor sentiment, improve financing conditions, and accelerate momentum in demand. Specifically, it is expected to make home loans more affordable and spur growth in the mid-range and affordable housing markets. The RBI’s continued policy support underscores its commitment to balancing economic growth with macroeconomic stability.”

Anuj Puri, Chairman – ANAROCK Group: “RBI’s decision to reduce the repo rates by 25 bps (to 6%) second time this year was expected to the backdrop of moderating inflation. 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.

“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 10-34% 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. INR 7,550 per sq. ft. in Q1 2024-end, while in Q1 2025-end it increased to approx. INR 8,835 per sq. ft. – a collective increase of 17% annually.

“Home loan borrowers whose lenders don’t pass on the rate cut could consider negotiating a lower rate or a balance transfer. They should keep their expectations realistic as there may be only partial relief, if any. Any potential EMI reduction should be used to prepay home loans or invest for higher returns instead of on mere consumption.”

Anurag Mathur, CEO, Savills India: “The RBI’s MPC advocated a repo rate cut by 25 basis points, the second consecutive time after a long halt of five years. Adopting an ‘accommodative’ stance, benchmark lending rates are now lowered to 6.00%. The RBI’s decision is justified amidst moderating inflation and the need to stimulate growth as Trump tariffs pose severe challenges to the global economy. Retail inflation declined to 3.61% in February 2025, well below the lower end of the RBI’s target range of 4%. India’s GDP growth for the third quarter of FY 2024-2025 stayed at 6.2%. Although improved from the previous quarter, it fell short of the 6.4% forecast. The rate cut will lead to reduced borrowing costs that would encourage credit flow, making home loans more affordable for homebuyers. This will, in turn, boost consumption and investment by incentivizing all real estate stakeholders. The residential market will likely see stimulated demand, particularly in the affordable and mid-income segments. End-users, as well as individual and institutional investors, will increase their property purchases. Developers would benefit from lower financing costs, which could lead to an acceleration in new construction projects. Overall, a great push that augurs well to drive demand in the residential sector.”

Mohit Goel, MD, Omaxe Ltd: “The RBI’s decision to reduce the repo rate by 25 basis points to 6% is a welcome move that 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.”

Aditya Kushwaha, CEO and Director Axis Ecorp: “The RBI’s decision to cut rates comes at a significant juncture when NRI interest in Indian real estate is gaining momentum. With the rupee experiencing volatility, luxury real estate and holiday homes present a compelling hedge—offering both capital appreciation and stable returns. This move is expected to boost sentiment across the premium housing segment, particularly in emerging lifestyle destinations. Lower borrowing costs will encourage investment in second homes and holiday properties, which are increasingly being seen as both lifestyle upgrades and long-term assets. Overall, the rate cut aligns well with the evolving preferences of global Indian investors, including HNIs, millennials, and new-age investors seeking stable, high-quality real estate opportunities.”

Avneesh Sood, Director of Eros Group: “The 25 bps repo rate cut to 6% goes beyond affordability—it reshapes investor psychology. In a high-volatility global environment, policy consistency becomes the new catalyst. This rate cut signals predictability, which institutional and retail investors deeply value. For the Indian real estate sector, it’s not just about cheaper loans—it’s about reinforcing trust in long-term asset classes like housing. This clarity will unlock capital flows into underpenetrated Tier 2 and Tier 3 markets, where aspiration meets affordability. The RBI has subtly shifted the narrative from reactive relief to proactive confidence-building, and that’s what will define the next phase of real estate growth.”

Amit Bhagat, Co-Founder, CEO and MD, ASK Property Fund: “Housing demand has been robust in the last 4-5 years, driven by stable macros, strong consumer sentiment, income and wealth growth. However, an increase in capital values has started impacting sales across segments.

“A further rate cut of 25 bps with an accommodative stance announced today, post a 25-bps rate cut in February 2025, is likely to further improve affordability. The falling interest rate cycle is likely to sustain consumer sentiment to some extent which has started seeing signs of weakening amid the current global turmoil and uncertainty.”

Aman Sarin, Director & Chief Executive Officer, Anant Raj Limited: “The RBI’s second consecutive rate cut is a welcome move and is expected to provide a strong boost to real estate demand, especially by making home loans more affordable for buyers.

“In its latest review, the Monetary Policy Committee not only reduced the repo rate by 25 basis points but also shifted its stance from ‘neutral’ to ‘accommodative’ — a clear signal that, going forward, the MPC is now considering only two possibilities: status quo or further rate cuts.

“This change in stance is extremely encouraging, especially for the housing sector. We anticipate more rate cuts in the coming quarters, and the biggest beneficiaries will be home loan borrowers—particularly those taking large-ticket loans for mid and premium homes. Lower interest rates enhance both affordability and loan eligibility, helping many fence-sitting buyers finally make their purchase decisions.

“We also expect renewed interest in the high-end and luxury segments as improved purchasing power, combined with softening rates, makes aspirational living more attainable for a wider audience.”

Vimal Nadar, Head of Research at Colliers India: “In the first MPC meeting of the fiscal 2025-26, RBI has further reduced the repo rate by 25 bps to 6.0%. The change in stance from ‘neutral’ to ‘accommodative’ is indicative of a growth supportive monetary policy and this becomes more critical in the backdrop of heightened uncertainty in global markets following the levy of reciprocals tariffs by the US. Although the intensity and impact of ongoing tariff escalations needs to be fully ascertained, RBI remains optimistic on domestic growth outlook and projects the GDP to grow by 6.5% in the fiscal 2025-26. Recent easing of inflation is likely to increase disposable income which in turn has the potential to boost domestic consumption.

“Consecutive reduction in benchmark lending rates will boost homebuyers’ sentiments and resultantly improve housing demand particularly in affordable and middle-income segments. Real estate developers across segments also stand to benefit from likely lowering of financing costs. Overall demand and real estate growth is likely to be on the upswing, given the anticipation of further easing in monetary policy. However, global headwinds and trade frictions will remain a key monitorable for all economic sectors including real estate.

“RBI has also proposed securitization of stressed assets through a market-based mechanism, in addition to the Asset Restructuring Company (ARC) route. Reduction in borrowing costs coupled with alternate resolution mechanism for stressed assets is likely to benefit real estate stakeholders in the near-mid-term. This is expected to provide significant relief to cash strapped developers and several stalled projects due to financial constraints.”

Shrinivas Rao, FRICS, CEO, Vestian: “The repo rate cut of 25 basis points is in line with current market conditions as the headline inflation in February was within the RBI’s tolerance limit due to a sharp decline in food prices. On the other hand, the fear of recession is also looming globally amid trade friction between the USA and its trade partners. This reduction in the repo rate is expected to catalyse domestic consumption, boosting GDP growth. Moreover, the change in stance from ‘Neutral to Accommodative’ points towards easy monetary policy and future rate cuts, leading to a reduction in mortgage rates and a boost to the real estate demand.

Amit Goyal, MD, India Sotheby’s International Realty: “The RBI’s 0.25% repo rate cut is a stabilising and much-needed move at a time when global economic turmoil poses challenges. By ensuring liquidity and keeping borrowing costs attractive, this decision by the central bank, will bolster corporate confidence and investments. For India’s housing sector, if the rate cut is passed on as a benefit on home loans, it will support the demand momentum, and help the real estate industry ride over this period of uncertainty.”

Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd: “The Reserve Bank of India’s decision to reduce the policy rate by 25 basis points to 6% comes at a crucial juncture when inflation is beginning to show signs of stability and the broader economic environment appears favorable for nurturing growth through lower interest rates. This proactive move is expected to significantly boost homebuyer sentiment, as reduced interest rates translate into improved affordability, thereby encouraging a larger number of people to consider investing in real estate. On the developer front, the lower cost of borrowing will offer a much-needed cushion, enabling them to fast-track project launches, expand their portfolios, and cater to the anticipated rise in housing demand. Overall, this policy rate cut is a timely and positive step that holds promise for stimulating activity across the entire real estate value chain, benefiting both end-users and industry stakeholders alike.”