While inflation remains subdued, several headwinds persist: corporate investment remains weak, and industrial output has slowed significantly, undermining growth momentum The Times of India.

Industry Voices: Mixed Signals on the Rate Path Ahead

Akhil Saraf, Founder & CEO, Reloy

He argues that, with inflation low and private investment depressed, a “substantial rate cut” is warranted. Lower rates, he says, would revive borrowing, boost demand and restore private-sector confidence — a “decisive push” at a critical juncture.

Vimal Nadar, National Director & Head of Research, Colliers India

Nadar notes that while the RBI has already delivered 100 bps of easing in 2025, including the June move to 5.50%, the bank is likely to maintain a neutral stance for now. Lower financing costs will benefit real estate developers, lenders and homebuyers—especially ahead of the festive housing season in late 2025.

Shrinivas Rao, CEO, Vestian

Rao emphasizes external headwinds, notably U.S. tariffs, urging caution. He expects the RBI to hold rates steady in the near term to maintain macro resilience but leaves room for rate cuts if inflation continues its downward trajectory.

Piyush Bothra, Co‑Founder & CFO, Square Yards

Bothra concurs on a wait-and-watch posture at 5.50%, given global uncertainties and incomplete transmission of earlier cuts. He sees a 25 bps rate cut in October as plausible—timed to support housing demand during the festive quarter.

Macro Context: The Tightrope Between Growth and Inflation

• Inflation trends: Inflation has moderated sharply—from ~3.16% in April to ~2.10% in June—providing the RBI room for further easing Reuters+4Reuters+4Reuters+4Reuters+1Jiraaf+1.
• Growth signals: While Q1 FY26 GDP expanded ~7.4%, industrial production slowed to a 10‑month low (~1.5%), raising concerns about underlying demand The Times of India.
• Global uncertainties: Elevated U.S. tariffs and trade shot at India pose headwinds; economists expect the RBI to monitor spillover risk before easing further ReutersThe Economic Timesdeccanherald.com.
• Policy shift: The RBI moved from an accommodative stance to “neutral” in June, suggesting further action would depend on incoming data rather than past momentum Reuters.

What Lies Ahead

• Markets largely expect the repo rate to stay at 5.50% in August, with approximately 75% of economists anticipating a hold during the MPC meeting on August 6 Reuters.
• Some forecasts—including one from SBI—suggest a 25 bps reduction later in August, to stimulate credit and give an “early Diwali” boost ahead of the festival season The Economic Times.
• Others, including Colliers, Vestian and Square Yards, see October as a more likely date for the next cut, contingent on inflation durability and full transmission of past rate moves.

Summary Table

Final Word

The RBI enters its August 6 Monetary Policy Committee meeting with subdued inflation firmly under control—but with growth signals and investment trends remaining worryingly soft. While most analysts expect the repo rate to remain unchanged at 5.50%, an October rate cut of 25 bps remains on the cards if inflation stays low and the RBI sees positive transmission.

Also Read: RBI Cuts Repo Rate by 25bps: A Boon for Homebuyers and the Real Estate Sector

The post RBI Expected to Hold Rates at 5.50%, but Experts See Case for Further Cuts appeared first on Square Feat India.

Affordability Index – EMI as % of Household Income

Source: Knight Frank India, H1 2025

What Does 48% Affordability Mean?

Simply put: If you earn ₹1,00,000 a month in Mumbai, you’ll spend ₹48,000 on your home loan EMI — leaving you with ₹52,000 for everything else (groceries, kids’ fees, travel, savings).

Why it matters:
According to banks and global standards, an EMI above 50% of income is considered unaffordable. This means many homebuyers in Mumbai either:

• Stretch their budget beyond safety limits
• Depend on double incomes
• Or compromise on home size or location

Mumbai Drops Below 50% Mark — A First

“For the first time ever, Mumbai’s affordability level has dropped below the 50% threshold,” said the Knight Frank report.

This improvement is credited to the RBI’s 100 basis points repo rate cut in 2025, which lowered home loan interest rates and made EMIs lighter for borrowers.

Example: EMI Comparison – Mumbai vs. Ahmedabad

Mumbai homebuyers pay over 2.5x more of their salary in EMI than those in Ahmedabad.

NCR Only City Where Affordability Worsened

Despite the repo rate cut, affordability in NCR worsened — EMI burden rose from 27% to 28%. This was due to steep property price hikes, which outweighed the benefit of lower interest rates.

Expert Insight: What’s Next for Buyers?

“Affordability plays a critical role in sustaining demand. With strong GDP growth and lower interest rates, we expect housing momentum to remain positive in 2025,”
— Shishir Baijal, CMD, Knight Frank India

Affordability Trends Over the Years (Mumbai)

Gradual but significant improvement in a decade.

Conclusion: Mumbai is Still a Dream – But a Costly One

Even with rate cuts and economic growth, owning a home in Mumbai remains a financial stretch for the average household. The small drop in EMI burden is a step in the right direction, but unless home prices stabilize or incomes rise faster, true affordability may still be a distant goal for many.

Also Read: Home Purchase Affordability Index

The post In Mumbai, You’ll Need to Spend 48% of Your Salary on EMI to Afford a Home appeared first on Square Feat India.

In a much-anticipated move that spells good news for homebuyers, the Reserve Bank of India (RBI) has slashed the repo rate by 50 basis points (bps), bringing it down to 5.5%. This is the third consecutive cut in 2025, aimed at reducing borrowing costs and improving affordability amid a backdrop of moderating inflation and global economic uncertainty.

The rate cut is a double win for the real estate sector, particularly affordable and mid-income housing, which has been struggling post-pandemic. The RBI also reduced the Cash Reserve Ratio (CRR), enhancing liquidity in the banking system and enabling more robust lending.

Lower EMIs, Higher Affordability

Industry experts unanimously agree that this move will bring relief to homebuyers, particularly first-time buyers and those eyeing mid-segment properties. With home loan interest rates likely to fall below 7.75%, monthly EMIs are expected to become significantly lighter, making homeownership more accessible.

Anuj Puri, Chairman of ANAROCK Group, noted that while affordable housing has seen a decline in both sales and new launches since 2019, a 19% dip in unsold inventory indicates that demand remains strong among end-users. “This rate cut makes borrowing cheaper for buyers and developers alike, and we hope the banks pass on the full benefit,” he said.

Boost for Developers and Project Timelines

Developers also stand to benefit from the RBI’s liquidity push. The CRR cut means banks have more capital to lend, potentially improving funding for project development and timely completion. Manju Yagnik, Vice Chairperson of Nahar Group, emphasized that this will help revive interest in both mid-income and premium housing, easing liquidity issues and stimulating fresh demand.

“This cascading effect through the lending ecosystem will not only improve affordability but also unlock capital needed to absorb unsold inventory and support over 200 allied industries tied to real estate,” Yagnik said.

Shift in Market Focus

According to Shishir Baijal, Chairman and MD at Knight Frank India, the rate cuts are likely to rebalance housing market activity, which has been skewed towards premium housing in recent years. “The RBI’s cumulative 100 bps reduction is expected to reignite interest in the lower segments and give longer legs to the ongoing housing upcycle,” he said.

Dharmendra Raichura, VP & Head of Finance at Ashar Group, sees the move as a confidence booster. “Lower rates improve sentiment, enabling developers to offer better deals and launch new projects,” he added.

Premium Segment to Benefit Too

Even premium housing could get a lift. Sunny Bijlani, Joint Managing Director at Supreme Universal, said the rate cut will make larger, lifestyle-oriented homes more attainable. “This boost in affordability and confidence enables developers to focus on quality and timely delivery,” he added.

Positive Macro Outlook Despite Global Headwinds

While global economic risks—like rising import costs due to trade tensions—pose a challenge, India’s growth fundamentals remain solid. Kanika Singh, Chief Risk Officer at IMGC, highlighted the significance of the repo rate being at a three-year low. “If banks transmit the rate cut effectively, homebuyers will see substantial EMI relief,” she said.

She also hinted at possible further rate cuts if inflation stays under control and geopolitical uncertainties continue.

Conclusion

With a decisive 50 bps cut in repo and supportive liquidity measures, the RBI has set the stage for stronger homebuyer sentiment and broader real estate revival. The focus now shifts to banks’ timely transmission of these benefits, and developers’ responsiveness to renewed demand. For those planning to buy a home, this could be the ideal window to act.

Also Read: RBI Repo Rate Hike May impact Home buyer sentiments

The post Homebuyers Rejoice: RBI’s 50 bps Rate Cut Lowers EMIs, Boosts Affordable Housing Prospects appeared first on Square Feat India.

In a significant move that spells good news for homebuyers across India, the Reserve Bank of India (RBI) has slashed the repo rate by 25 basis points to 6%, marking its second consecutive cut. The decision, aimed at supporting economic growth amid global uncertainties, has been widely welcomed by real estate stakeholders for its potential to stimulate housing demand and improve affordability—especially for end-users in the affordable and mid-income segments.

Here’s what the real estate and financial leaders have to say:

A Welcome Move to Boost Buyer Sentiment

Prashant Sharma, President, NAREDCO Maharashtra, said the rate cut “comes as a welcome and timely move” and will act as a much-needed catalyst to revive both consumption and investment cycles. He emphasized its impact on improving affordability and boosting sentiment in the affordable and mid-income segments.

Shraddha Kedia-Agarwal, Director at Transcon Developers, called it a “strategic push” toward economic revival. “Lower interest rates make home loans more attractive, especially in metros like Mumbai. This will go a long way in supporting buyer sentiment and end-user driven purchases,” she added.

Boman Irani, President, CREDAI National, hailed the move as “pro-growth,” especially with inflation expected to moderate to 4.5%. He noted it would enhance borrowing capacity and uplift housing demand, particularly in rate-sensitive categories.

Transmission Still a Concern

Anuj Puri, Chairman, ANAROCK Group, struck a cautious tone. “Banks have not fully transmitted earlier rate cuts due to funding pressures and high NPAs. If they do now, it will help homebuyers—especially first-timers looking at affordable housing,” he noted. He also flagged a 17% average rise in housing prices across top 7 cities year-on-year, which makes rate transmission crucial for EMI relief.

Affordability and Access to Housing in Focus

Anurag Goel, Director, Goel Ganga Developments, said the move is especially beneficial for EMI-dependent homebuyers. “This will strengthen buyer confidence and improve conversion rates from inquiry to booking, particularly in Tier 1 and Tier 2 cities,” he noted.

Chintan Sheth, CMD of Sheth Realty, added that lower rates would “usher benefits across affordable, mid-income, and premium segments.”

Jash Panchamia, Promoter of Suraksha Smart City, emphasized the positive impact on PMAY beneficiaries and the EWS segment, saying it supports the government’s vision of ‘Housing for All’.

Real Estate Developers: Ready to Launch and Expand

Parthh K Mehta, CMD of Paradigm Realty, said this move creates opportunities in luxury housing, enabling developers to launch “iconic projects backed by favorable financing.”

Bhavesh Shah, JMD of Today Group, noted that the rate cut could significantly drive sales in growth hubs like Navi Mumbai.

Mohit Goel, MD, Omaxe Ltd., called it a “catalyst for demand revival,” adding that lower borrowing costs will ease financial burdens for both homebuyers and developers.

Macro Trends, Tariff Concerns, and Future Outlook

Vimal Nadar, Head of Research at Colliers India, explained that while global tariff escalations remain a concern, the RBI’s “accommodative” stance will help boost domestic consumption and housing demand.

Amit Goyal, MD, India Sotheby’s International Realty, agreed: “If passed on to borrowers, this cut will help the real estate sector navigate global economic uncertainty.”

Anshul Jain of Cushman & Wakefield emphasized the positive shift from “neutral” to “accommodative,” reinforcing the RBI’s growth-supportive intent and likely future rate cuts.

Shrinivas Rao, CEO of Vestian, said, “The policy shift and easing inflation suggest mortgage rates could drop further, enhancing real estate demand.”

Sanjay Daga, CEO of Anex Advisory, pointed out that further cuts may be needed to offset tariff pressures and stock market volatility.

For FD Investors: Time to Reassess Strategy

Aman Gupta, Director of RPS Group, warned that declining rates mean FD investors should revisit their strategies. He recommended exploring small finance banks for better rates, considering tax-efficient instruments like SCSS, and maintaining an emergency fund while diversifying into hybrid funds cautiously.

Bottom Line for Homebuyers:

• Lower EMIs could be on the horizon—if banks pass on the cut.
• First-time and budget-sensitive buyers stand to benefit the most.
• Developers gain breathing room, which may lead to new launches and faster project completions.
• Real estate remains a safe, long-term asset, especially amid global uncertainty.

Whether you’re looking to buy your first home or refinance an existing loan, this rate cut offers an opportunity to reassess your home finance strategy and potentially act before prices or interest rates climb again.

Also Read: RBI makes Homebuyers happy, Repo rates unchanged

The post RBI Rate Cut Brings Good News for Homebuyers: Lower EMIs appeared first on Square Feat India.