Fourth Straight Hold, Neutral Stance Retained
The Reserve Bank of India’s Monetary Policy Committee has kept the repo rate unchanged at 5.25 per cent for the fourth consecutive meeting, maintaining its neutral policy stance. The decision, announced by RBI Governor Sanjay Malhotra after the three-day policy meeting held between August 3 and August 5, comes as the central bank continues to balance domestic growth momentum against global uncertainty stemming from the ongoing West Asia conflict. Consequently, the Standing Deposit Facility rate remains at 5 per cent, while the Marginal Standing Facility rate and the Bank Rate continue at 5.5 per cent.
For homebuyers, the status quo means EMIs on existing and new home loans stay exactly where they are, at least until the next policy review scheduled for October. That predictability is quietly becoming as important to the housing market as the headline rate itself.
What the Governor Said
Explaining the rationale behind the pause, Malhotra said the MPC arrived at its decision after assessing evolving domestic macroeconomic and financial conditions alongside the global outlook, noting that the continuing conflict in West Asia has disrupted trade routes and supply chains, increased market volatility and weakened business sentiment. He flagged that global growth is expected to slow while inflation stays elevated through the year, adding to the case for caution rather than any immediate rate action.
On prices, the Governor struck a watchful but not alarmist tone. He said headline inflation is expected to rise further in the near term and likely peak in the third quarter, largely on account of food and fuel, before moderating thereafter, while underlying or core inflation has stayed contained and should converge with the headline number by the end of the financial year. Importantly, he attributed the anticipated inflation uptick to supply-side factors rather than any broad-based demand pressure, a distinction that matters, since it suggests the central bank doesn’t see the kind of runaway pricing pressure that would force its hand on rates.
On growth, Malhotra pointed to resilient domestic demand, steady expansion in manufacturing and services, and healthy exports as the pillars supporting the economy, projecting real GDP growth for FY27 at 6.7 per cent, with the strongest quarter expected to be the first at 7 per cent before moderating and picking up again by Q4. He was candid, however, that the outlook remains hazy given global trade policy uncertainties, and that greater clarity is needed on inflation’s path before any policy shift. The headline takeaway for the property market remains the fourth straight hold.
Industry Reads It as a Green Light for Festive Season Buying
Real estate voices were broadly welcoming, several framing the timing as significant given the run-up to the festive season, traditionally the busiest home-buying window of the year.
Amit Goyal, Managing Director of India Sotheby’s International Realty, called this the fourth consecutive policy with rates unchanged and said the decision reflects confidence in the resilience of the Indian economy even as crude prices stay elevated and June retail inflation touched an 18-month high. He noted this is the last policy review before the festive season, giving both buyers and developers greater certainty to plan purchases and launches, and expects the combination of steady rates and easing crude to support sentiment through the coming quarters.
Dharmendra Raichura, VP and Head of Finance at Ashar Group, echoed that view, saying the RBI’s decision to hold the rate at 5.25 per cent reinforces confidence in an already resilient residential market by providing certainty around borrowing costs. With a broad consensus among economists that the rate could stay at 5.25 per cent through the rest of 2026, he expects homebuyer sentiment, financing decisions and residential demand to stay healthy over the next six to twelve months, with predictable EMIs improving purchase planning while developers gain clearer visibility on project execution and capital allocation. He added that faster transmission of policy rates into home loan pricing by banks, along with adequate systemic liquidity, would further strengthen affordability and end-user demand.
Affordability Concerns Persist Despite Stability
Not every voice was unreservedly upbeat. Anuj Puri, Chairman of ANAROCK Group, cautioned that a steady policy rate is welcome for stability but insufficient on its own to revive the mass-market housing cycle. He pointed to ANAROCK’s Q2 2026 data showing total sales across the top seven cities fell 6 per cent year-on-year to about 90,715 units, even as affordable housing supply shrank to just 6 per cent of total launches despite overall new supply rising 7 per cent to roughly 1.06 lakh units. With average residential prices still climbing around 7 per cent annually across major cities, Puri argued that rate steadiness alone cannot meaningfully move the needle on affordability, and that the market’s apparent balance is being driven by the luxury segment rather than the broader, more rate-sensitive affordable housing category.
A Vigilant Central Bank Amid Global Headwinds
Lata Pillai, Senior Managing Director and Head of Capital Markets, India, at JLL, framed the hold as a sign of caution rather than complacency. She noted the RBI has retained its neutral stance for a fourth straight time even as inflation risk stays elevated amid the evolving global situation and concerns around the monsoon. While Q1 GDP and broader macro indicators position India favourably, she said continuing high energy costs and a watchful eye on rainfall, against a backdrop of strong domestic demand, are keeping the central bank vigilant. Pillai flagged that FY27 GDP is now projected higher than at the last MPC meeting, at 6.7 per cent, while the inflation outlook has been revised down by 10 basis points to 5 per cent, even as volatile oil prices and food inflation could weigh on the next couple of quarters. She added that a strengthening rupee has offered some relief, with liquidity remaining healthy.
Vimal Nadar, National Director and Head of Research at Colliers India, said the hold reflects a vigilant approach given the resurgence of tensions in West Asia, volatile crude, a fluctuating rupee and persistent inflationary risks, though he believes Indian real estate is well positioned to navigate these downside risks. He said rate stability continues to offer comfort particularly to buyers in the affordable and middle-income segments, and with the festive season approaching, steady EMIs could support housing demand over the coming quarters, even as rising construction and labour costs pose affordability pressures that may moderate sales compared to last year. He also pointed to RERA’s recent advisory granting a four-month extension to eligible projects affected by the West Asia conflict as a timely regulatory relief for developers.
Shrinivas Rao, CEO of Vestian, described the decision as a balanced response to geopolitical uncertainty, an uneven monsoon and rising domestic inflation, one that should support capital inflows into real estate at a time when developers are grappling with elevated construction costs and softer foreign investment sentiment. He cautioned, however, that current mortgage rates may represent only a limited window for prospective buyers, and that a 25-basis-point hike could be on the table at the next MPC meeting if crude prices and inflationary pressures intensify.
Certainty Over Cuts: What Developers and Buyers Are Saying
Akhil Saraf, Founder and CEO of proptech firm Reloy, said the unchanged rate brings much-needed stability, arguing that in today’s market predictability matters just as much as lower rates. For buyers, it means more confidence in financial planning; for developers, it offers the certainty needed to plan investments and execute projects efficiently. While he acknowledged a rate cut would have given housing demand an extra push, he said holding the rate strikes the right balance between supporting growth and containing inflation.
Ashish Sharma, AVP Operations at Brahma Group, offered a similar assessment, saying the decision reflects a balanced approach to supporting growth while ensuring macroeconomic stability amid global uncertainty. He said stable rates enhance affordability and encourage buyers to move forward with purchase decisions, while giving developers the confidence to launch and execute projects, sustaining positive sentiment and growth momentum across the sector in the months ahead.
The Bottom Line for Homebuyers
With the next MPC review not due until October, homebuyers effectively have a two-month window of rate certainty heading straight into the festive season. EMIs stay predictable, developers get room to plan launches, and the broader consensus among economists suggests 5.25 per cent could hold well into the rest of 2026. The caveat, as Puri’s data makes clear, is that stability in rates does not automatically translate into affordability, especially for the mass and affordable housing segments still contending with rising prices and shrinking supply. For now, the message from both the RBI and the real estate industry is one of steady hands rather than dramatic moves.
Also Read: RBI Repo Rate Hike: Real Estate Sector Voices for Stability
