House That! Real Smiles All Around as RBI Cuts Repo Rate to 6.25 per cent

New Delhi, February 7, 2025: It’s been five years coming, but the Reserve Bank of India has bitten the bullet. New RBI governor Sanjay Malhotra on Friday announced a repo rate cut of 25 basis points to 6.25 per cent. The reduction in repo rates will provide relief to existing homebuyers as it helps reduce their equated monthly instalments (EMI) on home loans. The move will boost homebuying sentiment.

The rate cut comes on the heels of a significant reduction in income tax in the Union Budget 2025-26 and has turned sentiment positive in India’s large and growing real estate industry.
Here’s how industry leaders responded to the rate cut.

Pradeep Aggarwal, Founder and Chairman, Signature Global (India) Ltd: “The RBI’s decision signals a pro-growth shift aimed at sustaining India’s economic momentum. With GDP growth projected at 6.7 per cent for FY26, this move will enhance liquidity, encourage investments, and stimulate demand across key sectors. For real estate, it is a significant boost. Lower borrowing costs will improve home affordability, strengthening buyer sentiment, particularly in the mid-income and premium housing segments. Historically, reduced interest rates have triggered an upswing in housing demand, benefiting both homebuyers and developers. Additionally, improved credit access will support developers in securing funding for project execution, ensuring steady supply and timely deliveries. The real estate sector, contributing nearly 7 per cent to India’s GDP and projected to reach 13 per cent by 2030, will gain further momentum as urbanization accelerates and infrastructure investments expand. This move will also positively impact allied industries such as cement, steel, and construction materials, creating a multiplier effect on employment and overall economic activity. With a sustained focus on affordability and sustainable development, India’s housing market is well-positioned for long-term growth.”

Vimal Nadar, Head of Research at Colliers India: “As housing demand had begun to stabilize after witnessing record sales in the last 2-3 years, this rate cut comes at an opportune time and will have a significant bearing on boosting homebuyer sentiments. The rate cut along with the recent budgetary announcements related to creation of Urban Challenge Fund and tax reliefs under the new regime, are likely to stimulate urban growth and enhance domestic consumption. Higher disposable income and lowering of financing costs stand to benefit homebuyers and developers alike. Furthermore, the recent allocation of INR 15,000 crore for SWAMIH II fund is likely to expedite completion of stressed projects, boosting liquidity and spur home buying sentiments. Overall, evident tailwinds should boost real estate demand across asset classes.”

Shrinivas Rao, FRICS, CEO of Vestian: “The RBI’s 25 bps reduction in the repo rate was anticipated, given the slowdown in GDP growth to 5.4 per cent in the second quarter of FY25, marking the slowest expansion over seven consecutive quarters. This rate cut, the first in nearly five years, aims to bolster market liquidity. It’s likely to buoy the real estate sector with expectations of major banks trimming mortgage rates. However, it is also expected to exert downward pressure on rupee value in international markets, barring foreign investments.”

Girish Kousgi, MD & CEO, PNB Housing Finance: “The RBI’s decision to cut the repo rate by 25 basis points is a significant move that will provide much-needed relief to home loan borrowers and give a strong boost to the housing sector. Lower interest rates directly enhance affordability, making home loans more accessible for aspiring homeowners and first-time buyers. This decision aligns with the finance ministry’s recent budget announcement, which emphasized the need for fiscal and monetary policy to work in tandem to support economic growth. The rate cut is expected to drive renewed demand in the housing market, boosting overall sentiment and encouraging investments in the real estate sector. This rate cut, combined with the recent income tax relief, will further strengthen consumer confidence and contribute to sustained growth in the housing finance sector.”

Dr Niranjan Hiranandani, Chairman, NAREDCO: “It is a welcome move… comes at a crucial time. As inflation is now under control, the fiscal deficit remains moderate, and economic growth is expected to accelerate steadily, the reduction in the repo rate signals a renewed sense of resilience. Additionally, it assures us that despite external geopolitical uncertainties, our domestic economic climate keeps markets efficient and demand robust. Combined with the tax benefits announced in the FY26 budget for the middle class, this policy change will boost sales velocity. Thus, lowered interest rates will further nudge homebuyers to buy an ownership home with an upgraded lifestyle.”

Anuj Puri, Chairman, ANAROCK Group: “It is undeniably a major boost to the homebuyers, particularly for affordable housing buyers. Many first-time homebuyers who had been hesitating to take the plunge are likely to make their move now as home loan rates will reduce – as long as banks pass on the key benefits to buyers. This dovetails well with recent trends in the housing market, which continues to see strong momentum. Reduced home loan rates can help the overall positive consumer sentiment. Given that housing prices have risen across the top 7 cities in the last one year, this breather is welcome and timely. As per ANAROCK Research, 2024 saw average housing prices rise by anywhere between 13-30 per cent in the top 7 cities, with NCR recording the highest 30 per cent jump. The average prices in top 7 cities collectively stood at approx. INR 7,080 per sq. ft. in 2023-end, while in 2024-end it increased to approx. INR 8,590 per sq. ft. – a collective increase of 21 per cent annually. Commercial real estate, especially office spaces, can also benefit from lower borrowing costs for businesses, and lower rates also make REITs more appealing since investors look for stable returns in a falling interest rate environment.
“That said, the rate cut may be rendered less effective by rising property prices if inflation remains as high as it is now. Also, it remains to be seen if banks pass on the full benefit to borrowers in a timely and seamless manner.”

Manoj Gaur, CMD Gaurs Group and Chairman CREDAI National: “It is a very welcome move. Coming at the heels of a people’s friendly budget, it will definitely infuse positive sentiments in the economy. Coupled with the income tax rebate, and tax concessions on second home and rental income, it will not only infuse liquidity in the market but also leverage the real estate sector’s investment potential. 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. Real estate nationally has seen some good investment in the past year and this trend is bound to continue in the coming quarter with this announcement. While the current cut may have a limited direct impact, we anticipate that a further rate cut in the next MPC meeting will provide stronger impetus to overall demand, accelerating housing sales, particularly in the mid-income and affordable segments.”

Uddhav Poddar, CMD, Bhumika Group: “A rate cut after five years is definitely a big moment for the country and indicates the direction of the RBI, this will raise the spirit of the entire economy and the real estate sector in specific. On the one hand, it will make purchasing properties cheaper it will also encourage consumption. But more than everything, this step will boost market sentiments and lead us to hope for more such rate cuts in the future.”

Ashwani Kumar, Pyramid Infratech: “Amidst the surge in demand for high-end properties, a reduction in the repo rate is a significant move that will take the sector’s growth to new heights. This decision reflects the government’s responsiveness to buyer sentiments, setting the stage for increased sales and market activity. We anticipate sustained interest from buyers, while financial institutions and banks are likely to introduce more attractive lending options, further boosting the sector’s momentum.”

Dharmendra Raichura, VP of Finance at Ashar Group: “This move is expected to have a positive impact on the real estate sector, particularly for first time homebuyers. With lower home loan interest rates, our homebuyers will find housing more affordable, especially in the mid and premium segments. This reduced financial burden will boost property demand, encouraging more purchases and enhancing market liquidity. Developers, will also stand to benefit from improved cash flow and reduced financing costs. This will enable us to stimulate construction activity, leading to more real estate projects and employment. This policy shift, combined with stabilising inflation and accelerating urbanisation, creates a favourable environment for our customers to invest in their dream homes.”

Gurpal Singh Chawla, Managing Director, TREVOC: “It is a pivotal move. Cheaper borrowing costs, combined with recen tax concessions, create a strong tailwind for real estate. This shift isn’t just about affordability—it’s about renewed confidence in housing investments and liquidity flow.”

Vishal Sabharwal, Head Sales, Orris Group: “The RBI’s decision to cut the repo rate by 25 bps is a welcome move that aligns with the government’s progressive economic outlook. Lower interest rates will not only improve home loan affordability but also strengthen buyer confidence, driving real estate demand. Coupled with the Union Budget’s pro-housing measures, including tax relief and infrastructure investments, this monetary easing will provide the much-needed momentum for sustainable sectoral growth.”

Mukul Bansal, MD, Motiaz: “The RBI’s decision to reduce the repo rate by 25 basis points reflects a strategic effort to balance economic growth with inflation control. This timely move comes as the real estate market gains strong momentum. The lowered interest rates are expected to fuel greater enthusiasm among homebuyers, while also motivating developers to launch new projects and meet the evolving demands of a diverse buyer base.”

Rajjath Goel, Managing Director, MRG Group: “The RBI’s decision to cut the repo rate by 25 bps comes as a timely boost for the real estate sector. Lower interest rates translate to more favorable financing options, even for high-ticket properties. Combined with the increased disposable income from recent tax reforms in the Budget, this is an opportune moment for the sector, and we expect a sustained growth in sales this year.”

Manit Sethi, Director, Excentia Infra: “A 25 bps reduction in the repo rate will have a ripple effect across the real estate sector. It will not only lower borrowing costs for developers but also sustain buyers’ interest in the sector. Notably, this could trigger an increase in property transactions, particularly in Tier II and Tier III cities where affordability and infrastructure are key growth drivers. This will make homeownership more feasible and encourage developers to expand their footprints in these high-potential regions.”

Sandeep Chhillar, Founder and Chairman, Landmark Group: “The RBI’s proactive rate cut, coupled with favourable announcements in Budget 2025, sets a positive tone for the real estate sector. Reduced interest rates will lower EMIs for first-time homebuyers, making homes more accessible. We welcome this decision by the government which will drive long-term growth across various segments.”

Ravindra Gandhi, Founder and Managing Director of Tirasya Estates: “After two years of maintaining the status quo, the RBI’s decision to cut the repo rate by 25 bps will lower borrowing costs, making home loans more accessible and attractive. This move is expected to give a strong push to the luxury housing segment, particularly in Tier III and III cities like Goa, where the demand for second homes is steadily rising. Coupled with Budget 2025’s income tax rebates and incentives on second homes and rental income, these measures will not only infuse liquidity into the market but also enhance the investment appeal of luxury properties in emerging destinations, positioning them as both lifestyle assets and profitable ventures. Thus, we commend the government’s efforts in boosting the sector’s growth and hope for more such rate cuts in the future.”

Shorabh Upadhyay, MD, Trisol RED: “We welcome the RBI’s decision to cut the repo rate by 25 bps, a move that will directly enhance affordability and accessibility in the real estate sector. Coupled with the Union Budget’s revised tax slabs and increased rebate limits, this reduction in borrowing costs will empower homebuyers, particularly in the mid-income segment, to make confident investment decisions. Additionally, with significant capital allocation for infrastructure development, we anticipate accelerated urban expansion, improved connectivity, and a surge in real estate demand. This synchronized policy approach will not only drive homeownership but also strengthen real estate’s contribution to economic growth.”

Kunal Behrani, Chief Operating Officer, Unity Group: “This rate cut signals the RBI’s pro-growth stance and comes at a crucial time when the real estate industry is looking for sustained momentum. Reduced home loan interest rates will encourage more buyers to invest in property, while developers will benefit from lower financing costs for ongoing and new projects. We hope this is the beginning of a more accommodative monetary cycle that supports long-term industry growth.”

Vivek Sinha, Director, Sales & Marketing, KDMG Group: “The 25 bps rate cut by the RBI is a step in the right direction for the real estate sector. With borrowing costs coming down, we expect a surge in homebuyer inquiries and improved market sentiment. This decision will also provide a breather to developers by easing financing costs for projects. We urge banks and financial institutions to pass on the benefits to end-users quickly, ensuring maximum impact on housing demand and sales.”