The outlook reflects sustained momentum in the affordable housing segment, even as lenders adopt a more cautious stance on loan against property (LAP) amid early signs of asset quality stress in certain borrower sub-segments.

Key Growth Drivers & Segment Outlook

• Overall AUM: 20-21% growth expected in FY26 and FY27 (vs. ~23% in FY25).
• Home Loans: Expected to grow steadily at 18-20% in both fiscals, driven by:
  • Lower direct competition from banks in the affordable segment compared to prime housing.
  • Strong underlying demand from rising urbanisation.
  • Supportive government policies promoting affordable housing construction and financing.
• Loan Against Property (LAP): Growth to moderate to 24-26% in FY26 and FY27 (from ~30% in FY25), as lenders recalibrate underwriting following asset quality concerns in specific sub-categories.

Subha Sri Narayanan, Director, CRISIL Ratings, commented: “LAP has been a key driver for A-HFCs in recent years due to attractive yields. Growth will moderate slightly to 24-26% this fiscal and next, largely driven by lender prudence in response to asset quality concerns in specific sub-segments.”

Particular attention is on small-ticket LAPs (sub-Rs 15 lakh category). Between FY24 and FY25, over 70% of A-HFCs reported a notable rise in 90+ days past due (dpd) loans in this bucket — up by ~25-30 basis points. The trend persisted into the first half of FY26.

The uptick is attributed partly to portfolio seasoning and partly to higher borrower leverage, along with spillover effects from asset quality pressures in adjacent microfinance segments in certain geographies.

Asset Quality & Credit Costs

While overall asset quality metrics for A-HFCs are expected to slip marginally, they should remain under control. Delinquencies will drive a modest increase in credit costs, leading to slightly lower — but still healthy — profitability.

Return on managed assets (RoMA) is projected to stay steady at ~2.5% in both FY26 and FY27, reflecting a modest decline of ~10 basis points from the previous fiscal.

Profitability to Remain Resilient

Despite the slight uptick in credit costs, profitability is expected to hold up well due to several supportive factors:

• Customers in the affordable segment are relatively less sensitive to interest rate changes, helping yields remain firm.
• Greater reliance on bank funding should lower overall funding costs, especially as bank loans reprice downwards with a lag after repo rate cuts.
• Some A-HFCs offer hybrid products with an initial fixed-rate period, reducing vulnerability to falling interest rates.

Aesha Maru, Associate Director, CRISIL Ratings, noted: “From a profitability perspective, customers in this segment are less sensitive to interest rates and thus yields are expected to hold. Additionally, greater reliance on bank funding is expected to lower funding costs… Furthermore, some A-HFCs offer hybrid products with an initial fixed interest rate period, which makes them less susceptible to falling rates.”

Emerging Competitive Dynamics

While A-HFCs have enjoyed relatively lower competition from banks in the affordable housing space, this edge may narrow. As banks deepen their presence in the prime home loan market, traditional housing finance companies (HFCs) are likely to pivot more aggressively toward affordable housing to capture growth and higher yields.

The report cautions that the impact of this rising competition on A-HFCs’ growth trajectory will be monitorable in the coming quarters.

Bottom Line for Investors & Borrowers

Affordable housing financiers remain a resilient growth story in India’s mortgage landscape, with AUM expansion comfortably outpacing the broader industry. While LAP moderation and a slight delinquency uptick will nudge credit costs higher, strong home loan momentum, sticky yields, and favourable funding dynamics should keep profitability healthy at ~2.5% RoMA.

The segment’s performance continues to benefit from structural tailwinds — urbanisation, government support, and demand for entry-level homes — making it a key focus area for lenders and investors alike.

Also Read: Affordable Housing Gets a Boost as Maharashtra Tweaks Sand Policy; Shorter Leases Aim to Curb Over-Extraction

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Technology-Led Mortgage Fulfilment

Urban Money operates a fully digital platform that integrates API-based KYC, credit score verification, and income validation with banks’ loan origination systems — enabling loan sanction and disbursal in under five minutes.

Its tech stack allows seamless interaction among borrowers, lenders, and advisors, reducing turnaround time and removing paperwork bottlenecks that have traditionally slowed down home loan approvals.

Massive Distribution Network Across India

The company works with over 1.5 lakh channel partners and 95+ banks and NBFCs, positioning itself as one of India’s largest mortgage distribution networks.
Nearly 87% of its business comes from an aggregation model that connects real estate agents, DSAs, and financial advisors with lending institutions.

Urban Money’s gross transaction value (GTV) has surged from $0.2 billion in FY21 to $5.7 billion in FY25, reflecting deep penetration and partner-led scalability.

Consistent Multi-Year Growth

Between FY22 and FY25, Urban Money’s revenue grew at a CAGR of 120%, while its GTV expanded at a CAGR of 102%, underscoring the platform’s strong operational efficiency and market traction in India’s fast-evolving digital mortgage ecosystem.

Bridging the Credit Access Gap

Commenting on the milestone, Amit Prakash Singh, Co-Founder and CBO of Urban Money, said:

“While India’s credit ecosystem has expanded rapidly, access and awareness remain uneven — nearly half of eligible urban adults still don’t use formal credit channels. For many first-time homebuyers, the loan journey remains complex and fragmented. Our aim has been to simplify this process through a transparent, technology-driven platform that connects borrowers, advisors, and lenders on one network.”

He added that the company’s growth demonstrates how digital origination models can bridge the trust and accessibility gap in India’s mortgage sector.

Supported by Square Yards Ecosystem

Backed by Square Yards’ real estate and data ecosystem, Urban Money continues to strengthen its position as a key enabler of digital mortgage access and formal credit inclusion in India.

Its platform now plays a pivotal role in simplifying the home loan journey, especially for first-time buyers seeking transparency and speed in mortgage approval.

Also Read: Tech Transformations in Indian Real Estate: PropTech Set for 9.6% Growth by 2025

The post India’s Largest Mortgage Tech Platform Reports ₹714 Crore Revenue in FY25, Eyes Continued Scale Through API-Driven Loan Origination appeared first on Square Feat India.

Key Findings of the Report

According to NHB, as of September 30, 2024, the total outstanding individual housing loans in India reached ₹33.53 lakh crore, marking a 14% year-on-year (YoY) increase. The report attributes this rise to growing urbanization, policy support, and an expanding mortgage market.

• Loan Disbursements: During the half-year ending September 30, 2024, ₹4.10 lakh crore in housing loans were disbursed, contributing to a total of ₹9.07 lakh crore disbursed in the financial year 2023-24.
• Segment-wise Loan Distribution: Affordable housing dominated, with the Economically Weaker Section (EWS) and Low-Income Group (LIG) segments accounting for 39% of outstanding housing loans. The Middle-Income Group (MIG) comprised 44%, while the High-Income Group (HIG) made up 17%.
• Housing Price Index (HPI) Trends: The NHB-RESIDEX index recorded a 6.8% YoY increase in housing prices as of September 2024, compared to a 4.9% rise in the previous year.

Government Initiatives Driving Growth

The NHB report highlights the impact of major government schemes such as the Pradhan Mantri Awas Yojana (PMAY-U and PMAY-G), the Affordable Rental Housing Complexes (ARHC) scheme, and the Urban Infrastructure Development Fund (UIDF). The anticipated rollout of PMAY 2.0 and the increased focus on transit-oriented development are expected to sustain sectoral growth.

Challenges and Future Prospects

While the housing sector has witnessed robust expansion, the report underscores challenges such as regional disparities in credit access, affordability concerns, and climate-related risks. However, advancements in construction technology, digitization of land records, and policy support provide promising avenues for continued growth.

SFI Analysis:

The NHB report reaffirms the strength of India’s housing sector as a key driver of economic growth. The 14% YoY surge in individual housing loans indicates a resilient demand for homeownership, supported by affordable financing options and government incentives. The dominance of the MIG and affordable housing segments underscores the growing aspirations of India’s middle class. Additionally, the 6.8% rise in housing prices suggests sustained investor interest and confidence in real estate. However, ensuring equitable credit access across regions and mitigating economic uncertainties remain critical for long-term stability. Moving forward, integrating technology-driven solutions and sustainable housing practices will be pivotal in shaping India’s housing market trajectory.

Also Read: Seeking A Housing Loan? Read This New RBI Policy

The post India’s Housing Loan Market Expands to ₹33.53 Lakh Crore, Registers 14% YoY Growth appeared first on Square Feat India.

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

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This three-day expo will feature over 100 developers showcasing over 500 projects from more than 5000 locations. Developers like DGS TOWNSHIP, Adani Realty, and Rustomjee will present a wide range of housing options for attendees. In addition to developers, more than 25 financial institutions, including State Bank of India, Bank of India, and LIC Housing Finance, will offer home financing solutions to ensure a smooth buying experience.

The event’s theme, “Book Your Home in 10 Minutes,” aims to streamline the home-buying process by enabling visitors to quickly book homes and secure loan approvals. One of the key attractions will be India’s first Quick Real Estate Mall, which simplifies home bookings for first-time buyers.

On January 19, the expo will observe Pink Sunday, a special initiative for women homebuyers, offering an additional ₹2 lakh discount on home bookings, along with other developer promotions. This initiative encourages women to purchase homes in their own name and aims to empower them in the real estate market.

CREDAI-MCHI President, Mr. Dominic Romell, highlighted the expo’s focus on making the home-buying experience quicker and easier. “The ‘Book Your Home in 10 Minutes’ initiative at the Quick Real Estate Mall simplifies the process, allowing buyers to secure their dream homes with ease,” he said.

The expo will also feature various offers such as No Stamp Duty & GST, discounts up to ₹18 lakh, and ₹5 lakh spot booking discounts. Other perks include Flexi Pay Plans, Zero Club Charges, and giveaways such as iPhones and two-wheelers.

The event is expected to attract over 100,000 attendees over three days and will operate from 10:30 AM to 8 PM each day. Free parking will be available at the venue, and entry is free with prior online registration at www.mchihomes.com.

Also Read: Housing Prices Rise Across Top Indian Cities, Reports CREDAI-Colliers-Liases Foras

The post Rs 2 Lakh Discount for Women Homebuyers at This Prop Expo appeared first on Square Feat India.

Stability in Borrowing Costs

For developers and homebuyers alike, the unchanged repo rate ensures stability in borrowing costs. With the rate at 6.5%, developers benefit from consistent financing conditions, allowing them to plan projects and investments with greater certainty. Similarly, homebuyers can count on steady mortgage rates, which helps maintain buyer sentiment in a challenging economic environment.

The neutral stance from the RBI reflects a careful balancing act—keeping inflation under control without stifling economic growth. While this strategy helps create a stable economic environment, it also means that home loan borrowers will continue to pay relatively high Equated Monthly Installments (EMIs), limiting affordability for many potential buyers. This dampens hopes for an increase in demand, particularly among first-time homebuyers who could have been encouraged by lower interest rates.

Developer Optimism Amid Government Initiatives

Despite the absence of a rate cut, developers remain cautiously optimistic about the sector’s growth trajectory. Government initiatives, including infrastructure development and urbanization, continue to support the real estate market. The sector has already seen significant investments, particularly in the residential segment, thanks to the current interest rate levels.

The neutral stance is seen as a boon for the affordable and mid-segment housing markets. It ensures that demand remains stable, even as the sector contends with inflationary pressures and price fluctuations in raw materials. Developers also hope that the government will offer more incentives, such as tax relief and policy support, to further stimulate demand.

“The RBI’s decision to maintain the repo rate at 6.5% reflects a measured approach to managing inflation without hampering economic growth. The neutral stance provides much-needed stability in the financial markets, which is crucial for the real estate sector. The unchanged rates will help maintain buyer sentiment, especially in the affordable and mid-segment housing categories,” said the President of NAREDCO Maharashtra.

The RBI’s approach is also seen as a positive signal for commercial real estate, with steady borrowing costs supporting momentum across both residential and office segments. Developers continue to launch new projects, and investor confidence remains high, particularly in grade-A office spaces.

Benefits for Luxury and Holiday Homes

While the neutral stance on rates ensures stability for most segments, it is especially favorable for the luxury and holiday home markets. Stable interest rates enhance buyer confidence, making it easier for potential investors to commit to high-end real estate. Markets in emerging areas such as Alibaug and Lonavala, which have witnessed increasing interest in luxury properties, stand to benefit from this stability.

“The decision to keep the repo rate unchanged is a welcome move, especially for the luxury and holiday home markets. Stability in interest rates enhances buyer confidence, particularly in emerging markets like Alibaug and Lonavala, which have been witnessing increased interest in these segments,” said the Founder of Iraah Lifespaces.

As buyers in premium segments are less sensitive to changes in interest rates, they are more likely to proceed with transactions despite the overall economic uncertainty. This stability also helps developers plan innovative and high-value projects without the pressure of fluctuating interest rates.

Challenges in Affordable Housing

The absence of an expected rate cut is disappointing for those in the affordable housing sector, where lower interest rates could have spurred greater demand. Higher home loan rates continue to impact the affordability of homes for the middle and lower-income segments. Industry leaders had hoped that a reduction in the repo rate would ease liquidity and provide an additional push to the housing sector, particularly for affordable housing projects.

The Co-Founder and CEO of Build Capital emphasized that while the neutral stance is a positive for maintaining steady borrowing costs, the industry also looks forward to long-term measures that could enhance liquidity and credit flow in the market.

“The RBI’s neutral stance and focus on balancing inflation and growth are positive signals for the real estate sector, ensuring stable home loan rates as well. With repo rates unchanged, stable borrowing costs will sustain momentum across residential and commercial segments. We urge the RBI to consider long-term measures to enhance liquidity and credit flow in the industry,” said the CEO of Build Capital.

Liquidity Support via CRR Cut

In a related move, the RBI reduced the Cash Reserve Ratio (CRR) by 50 basis points to 4%. This reduction enhances the liquidity available to banks, allowing them to lend more to the real estate sector. While the rate cut was not as significant as many hoped, the CRR reduction is expected to provide a boost to credit disbursements, especially in sectors like real estate, where financing plays a crucial role.

Anuj Puri, Chairman of ANAROCK Group, noted that while a repo rate cut would have provided a more immediate stimulus to housing sales, the CRR reduction could still have a positive impact by improving credit flow. He added that the sector was already buoyed by pent-up demand and improved affordability, with many expecting that the final quarter of the financial year would continue to show strong housing sales.

Impact on Major Markets

The unchanged repo rate ensures that large markets such as Mumbai and Pune will continue to see sustained demand, even as home prices rise. As per reports, average housing prices in major cities had already increased by 23% in the third quarter of 2024. In this scenario, the stability in interest rates ensures that homebuyers are not deterred by rapidly rising costs, while developers are not forced to hike prices further.

“Stability in interest rates is particularly beneficial for high-value markets like Mumbai and Pune. With steady interest rates, buyer confidence will likely increase, driving steady demand and supporting sector growth,” said the Joint Managing Director of Supreme Universal.

In Mumbai, the residential real estate market is seeing strong momentum, with low unsold inventory and a continued demand from end-users. Infrastructure projects such as metro expansions are expected to further boost the demand for housing in key residential areas.

Looking Ahead

While the RBI’s decision to hold the repo rate steady was expected, it has left some segments of the real estate market hoping for more decisive action. As developers continue to navigate a challenging economic environment, they are calling for more government support, particularly in terms of tax incentives, faster approvals, and more favorable liquidity conditions. The sector’s optimism remains high, buoyed by robust demand across urban markets and government-backed infrastructure initiatives.

“The RBI’s decision to retain the repo rate at 6.5% is a balanced approach to manage growth and inflation. With India’s GDP expected to grow at 6.5–7% in FY 2024-25, this stability is vital for maintaining economic momentum. A steady rate ensures consistent repayment terms, which increases the confidence of homebuyers and encourages investments in the sector,” said the Vice Chairperson of Nahar Group.

Overall, the RBI’s neutral stance on the repo rate is seen as a double-edged sword for the real estate sector. While stability in borrowing costs provides confidence to developers and homebuyers, the lack of a rate cut means that affordability challenges remain for many. Nevertheless, the sector remains resilient, with stakeholders expressing hope that the government will continue to offer supportive policies to sustain growth in the coming years.

Also Read: RBI MPC Meeting Begins Repo Rate Likely to Remain Unchanged, with Real Estate Sector Watching Closely

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As the festive season kicks off, the Mumbai property market has witnessed a significant surge, with property registrations soaring by 38% compared to the same period last year. In just the first five days of Navratri, over 7,600 property registrations were recorded—a remarkable increase from previous years. This surge is fueled by a combination of buyer enthusiasm, attractive festive offers, and a growing demand for residential investments. Developers are responding with enticing deals, discounts, and flexible payment plans, further enhancing market momentum.

Here’s why investing in a home during the festive season is a smart move:

1. Discounts and Offers

One of the most appealing aspects of the festive season is the array of discounts and offers available for homebuyers. Developers and real estate companies typically launch time-bound deals that come with various benefits, including significant discounts, waived processing fees, and complimentary maintenance for a specified period. Many developers are offering cash discounts, gift vouchers, and free upgrades, such as modular kitchens and air conditioning units. Flexible payment options add to the competitive atmosphere, creating a sense of urgency for potential buyers.

2. Home Loan Deals

The festive season also brings an influx of attractive home loan schemes from banks and financial institutions. These lenders often lower interest rates, reduce processing fees, and extend repayment tenures to entice buyers. Such favorable financial terms make homeownership more accessible during this time.

3. Property Appreciation

Investing during the festive season can be a savvy long-term strategy. The real estate market generally appreciates over time, and entering the market during this vibrant period allows buyers to benefit from lower prices and enhanced offerings. With a focus on clearing inventory and launching new projects, buyers have a broader selection of properties at various price points, ensuring they find homes that meet their current needs while promising future value appreciation.

4. Government Policies

Government initiatives play a pivotal role in boosting the real estate market during the festive season. Policies that promote homeownership, such as GST exemptions and other incentives, encourage sales during this period. The government’s emphasis on affordable housing and infrastructure development contributes to a positive outlook in the industry. With ongoing projects improving urban connectivity and amenities, this festive season presents a prime opportunity for buyers to capitalize on favorable market conditions and supportive government policies.

5. New Project Launches

The festive season is also the most popular time for developers to launch new projects, aiming to capitalize on heightened buyer interest. This influx of new options is often accompanied by special deals designed to attract buyers. Developers frequently offer early bird discounts or additional amenities, allowing homebuyers to save significantly while investing in newly launched properties.

6. Stable Rates

Another significant advantage of the festive season is the stabilization of property rates. The real estate market becomes less volatile during this time, providing a more predictable environment for buyers. Developers are motivated to sell inventory, leading to competitive pricing and stable rates, making it an ideal moment for investment.

Conclusion

The festive season presents a unique convergence of opportunities for homebuyers and investors alike. From attractive discounts and favorable home loan deals to heightened sales activity and a plethora of new project launches, this time of year offers immense benefits for those looking to invest in property.

If you’ve always dreamed of owning a home, now is the perfect time to take the plunge. With careful planning and research, you can navigate the market effectively. Embrace the festive spirit and make this the year you invest in your future!

Also Read: Festive Real Estate Market Sees Rs 350 Crore in Sales Over Dussehra Weekend

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Anuj Puri, Chairman of ANAROCK Group, highlighted that the fundamentals of the Indian economy remain strong despite global challenges. He noted that while a rate cut would have been ideal, the RBI’s cautious stance is understandable given various macroeconomic factors. The unchanged repo rate is expected to help maintain momentum in the housing market during the festive season, especially amid rising housing prices and declining sales.

In Q3 2024, average housing prices in the top seven cities surged by 23%, reaching approximately INR 8,390 per sq. ft., up from INR 6,800 per sq. ft. a year earlier. Despite this price increase, residential sales fell by 11% compared to Q3 2023, and new property launches decreased by 19%.

The consistent home loan rates provide essential support for demand during the festive quarter, with expectations for faster sales momentum in Q4 2024. Last year’s festive quarter saw over 1.27 lakh units sold across the top seven cities, and the current stability in interest rates is anticipated to encourage similar or even higher demand this year.

Dharmendra Raichura, Vice President and Head of Finance at Ashar Group, emphasized that the RBI’s stable approach promotes overall economic stability while keeping inflation in check. The RBI has maintained its inflation forecast at 4.5% for FY2025, alongside a solid GDP growth projection of 7.2%. This steady rate is expected to foster a favorable environment for sustainable growth in the real estate sector.

The Vice Chairperson of Nahar Group and Senior Vice President of NAREDCO Maharashtra Manju Yagnik, stated that the decision to keep the repo rate steady is a positive step for the real estate sector amid ongoing global economic uncertainties. This consistency is particularly important as the festive season, a peak time for home purchases, approaches. By maintaining manageable EMIs, potential homebuyers are encouraged to invest, particularly in the affordable housing segment. Furthermore, this stability benefits developers by improving cash flow and reducing borrowing costs for ongoing projects, ultimately supporting the growth trajectory of India’s housing market.

Also Read: RBI’s Upcoming Monetary Policy Announcement: Implications for the Housing Market

Here’s more comments from the industry.

“RBI’s decision to maintain the policy rate at 6.5% while shifting its stance to ‘neutral’ is a balanced approach that takes into account the current macroeconomic conditions and future outlook. This shift provides much-needed flexibility, allowing the RBI to respond swiftly to evolving inflation trends. For the real estate sector, this decision is particularly important as it signals a steady interest rate environment, which can help sustain the ongoing demand for home loans. A continued focus on stability in the financial ecosystem, along with a projected GDP growth of 7.2% for FY25, provides a positive outlook for the real estate sector.” — Prashant Sharma, President, NAREDCO Maharashtra

“The RBI’s decision to maintain the key policy rates reflects an assessment of the current macroeconomic conditions and future outlook. The continuation of the current policy rate at 6.5% ensures stability, while the potential for rate adjustments based on future inflationary data is a positive signal for the real estate sector.” — Deepak Nair, COO & Co-Founder, The Mentors Real Estate Advisory Pvt. Ltd.

“The RBI’s decision to maintain the policy rate at 6.5% is a strategic move that signals the central bank’s readiness to navigate changing economic conditions. This stable interest rate environment should bolster market confidence, allowing developers and homebuyers to plan with more certainty.” — Anil Mutha, Chief Visionary & Co-Founder, Nandivardhan Group

“The RBI’s decision to maintain the policy rate at 6.5% reflects a nuanced understanding of the current economic scenario. A stable policy rate ensures a favorable lending environment, supporting homebuyers’ sentiment.” — Shraddha Kedia-Agarwal, Director, Transcon Developers

“The real estate market has demonstrated strong performance, fueled by rising demand for homeownership and increasing income levels. We are optimistic about a surge in demand in the coming months.” — Samyak Jain, Director, Siddha Group

“The RBI’s decision to maintain the repo rate at 6.5% helps balance inflation with support for growth. It enhances consumer confidence and encourages investment in property.” — Rohan Khatau, Director, CCI Projects

“RBI’s decision to maintain the policy rate at 6.5% marks a strategic move to balance growth and inflation dynamics. A stable interest rate environment is vital for sustained momentum in housing demand.” — Govind Krishnan Muthukumar, Co-founder & Director, Tridhaatu Realty

“RBI’s decision to maintain the repo rate at 6.5% emphasizes its role in controlling inflation and sustaining economic growth. This will further motivate potential buyers to pursue homeownership.” — Himanshu Jain, VP – Sales, Marketing and CRM, Satellite Developers Private Limited

“The RBI’s decision to hold the repo rate brings cheer among homebuyers, as the relatively affordable home loan interest rate regime will continue during the festive season.” — Rajiv Agrawal, Co-Founder, Saarathi Realtors

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However, interest rates are just one piece of the puzzle. Property prices also play a critical role in influencing purchase decisions. According to ANAROCK Research, average residential property prices across the top seven cities in India have surged by 46% since 2021. More favorable interest rates could enhance overall affordability, potentially catalyzing housing sales during the upcoming festive season. Increased sales would benefit developers by improving cash flows and lowering borrowing costs for ongoing projects.

Moreover, a rate cut could revitalize market sentiment and attract investors back into the housing sector. Following years of stagnation, investors began returning to the market post-COVID-19, drawn by rising demand and prices. However, many have since adopted a cautious stance as property prices appear to have stabilized. More attractive lending rates could encourage these investors to re-engage with the market.

That said, experts urge caution. While recent cuts by the US Federal Reserve might suggest a similar move by the RBI, the global economic landscape is currently fraught with uncertainty due to ongoing geopolitical tensions. As such, the RBI may choose to maintain the current repo rate until these pressures subside.

As stakeholders await the announcement, the housing market remains on edge, hopeful for a boost that could drive sales and investment in the sector.

Note: This Article is based on the insights of Anuj Puri, Chairman, Anarock Properties

Also Read: Unchanged RBI Repo Rates: A Boon for Real Estate Growth

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The leading real estate portal also observed that 58% of the demand for home loans is for the affordable segment (up to INR 40 lakh). Gurugram was the only outlier, where demand for home loans of the ticket size INR 40 to 60 lakh was also significantly high (25%); followed by the demand for loans of INR 1 to 1.5 crore (13%).

Further, 80% of the demand came from residents in tier 1 cities and Mumbai (22%), Bengaluru (19%), and Noida (17%) lead home loan disbursements.

Elaborating on the same, Nimesh Bhandari, Business Head- Home Loans shared, “There is a discernible shift in the investment preferences of Gen Z and millennials towards real estate, mirroring a similar trend in the home loans category. With a stabilized repo rate, real estate remains an attractive investment asset for this demographic, and we expect a sustained surge in demand in the forthcoming months. To facilitate smoother home loan procedures, Magicbricks has already partnered with 50+ financial institutions and targeting a five fold growth, with enhanced convenience and accessibility for our customers”

Magicbricks also shared that HDFC, SBI and Bajaj Housing lead in terms of home loan applications on its platform.

Also Read: Stamp Duty Paid for Napean Sea Flat is Rs 3 Crore, Imagine its Cost

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