The Reserve Bank of India (RBI) has announced a 25 basis points (bps) cut in the repo rate, reducing it from 6.50% to 6.25%. This marks the first rate cut in five years, a move that is expected to have a significant impact on India’s real estate sector, particularly for homebuyers and developers.
Lower home loan interest rates will provide much-needed relief to homebuyers by reducing their equated monthly installments (EMIs), making property purchases more affordable. Industry leaders believe this decision will drive housing demand, boost market activity, and encourage more investments in real estate.
A Positive Step for Homebuyers and Developers
Manju Yagnik, Vice Chairperson of Nahar Group and Senior Vice President of NAREDCO Maharashtra, welcomed the decision, stating, “The RBI’s decision to cut the repo rate by 25 basis points to 6.25% is a welcome step for the real estate sector, especially as this is the first reduction since February 2023. Lower home loan interest rates will provide much-needed relief to homebuyers, making property purchases more affordable by reducing EMIs. This move is expected to drive demand for housing, boosting market activity and encouraging more people to invest in real estate. It also enhances confidence among both buyers and developers, leading to a stronger and more dynamic sector. Developers will benefit from easier access to funds, helping them complete projects faster and meet the rising demand. At the same time, this decision aligns with the government’s focus on economic growth, supporting long-term stability in the housing sector. This rate cut is a much-needed push that will help both homebuyers and developers while driving positive momentum in real estate.”
The cut in the repo rate is expected to reduce borrowing costs, which will not only make home loans more affordable for buyers but also ease financial stress for developers.
Sunny Bijlani, Joint Managing Director of Supreme Universal, emphasized the benefits for both homebuyers and developers, saying, *“The RBI’s decision to cut the repo rate by 25 bps from 6.50% to 6.25% in February 2025 is a significant boost for the real estate sector, particularly for homebuyers and developers. Lower borrowing costs translate into reduced home loan EMIs, making property purchases more accessible, especially in the premium and luxury segments. This move will not only ease the financial burden on existing homeowners but also encourage new buyers to enter the market, strengthening overall demand.
For developers, the rate cut means lower financing costs, enabling them to fund projects more efficiently and accelerate delivery timelines. With capital becoming more affordable, we expect renewed momentum in high-end real estate, where buyers seek quality living spaces with long-term value appreciation. The increased liquidity and affordability will help clear unsold inventory, drive sales, and sustain the sector’s upward trajectory in 2025.”*
Encouraging First-Time Buyers
Experts believe that this rate cut will be especially beneficial for first-time homebuyers. Lower interest rates mean reduced financial burdens, making homeownership more attainable, particularly in the mid and premium housing segments.
Dharmendra Raichura, VP & Head of Finance at Ashar Group, highlighted the advantages for new buyers, stating, “The Reserve Bank of India’s (RBI) decision to reduce the repo rate by 25 basis points to 6.25% 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 stabilizing inflation and accelerating urbanization, creates a favorable environment for our customers to invest in their dream homes. With growing market confidence, developers are committed to delivering long-term value and success to our customers in 2025.”
The Road Ahead
With the RBI’s rate cut, banks and financial institutions are expected to pass on the benefits to borrowers, leading to a reduction in home loan interest rates. This will likely trigger an uptick in home sales, particularly in metro cities where property prices have been rising. The move also comes at a crucial time when urbanization is accelerating, and the demand for quality housing continues to grow.
While the real estate sector has seen steady demand over the past few years, affordability has been a key concern, especially for first-time homebuyers. With the repo rate cut, housing finance is expected to become more accessible, allowing more people to enter the market and invest in their dream homes.
Overall, this decision is a strong signal from the RBI in support of economic growth, and experts believe it will drive long-term stability in the real estate sector. As homebuyers enjoy lower EMIs and developers gain easier access to funding, the housing market is set to gain fresh momentum in 2025.
Also Read: RBI interest ratees
