RBI’s balanced approach to support housing demand

Mumbai: The Reserve Bank of India’s latest monetary policy announcement of keeping the repo rate unchanged at 5.25 per cent reflects a calibrated approach to balancing inflation risks with sustained economic growth, offering a sense of stability to the real estate sector amid ongoing global uncertainties.

Talking to Bizz Buzz, Raoul Kapoor, Co-CEO, Andromeda Sales and Distribution says, “The RBI’s decision to maintain the status quo on policy rates, despite prevailing global uncertainties and supply-side challenges, comes as a strong positive for borrowers, particularly home loan customers.” A stable interest rate environment ensures that EMIs remain predictable, allowing households to plan their finances with greater confidence and avoid any immediate increase in repayment burden.

At current home loan interest rates of around 7.25 per cent to 7.5 per cent per annum, the EMI for a 20-year tenure works out to approximately Rs790 to Rs810 per month per Rs1 lakh of loan. This means a Rs50 lakh loan would have an EMI of roughly Rs39,500 to Rs40,500, while a Rs1 crore loan would translate to about Rs79,000 to Rs81,000 per month, making borrowing relatively affordable in the current scenario.

For prospective homebuyers, it is important to plan the loan based on affordability rather than maximum eligibility, ensuring that EMIs remain within 30–40 per cent of monthly income to maintain financial stability. Opting for a longer tenure can help keep EMIs comfortable, but borrowers should aim to make periodic prepayments whenever possible to reduce the overall interest burden. Maintaining a contingency fund equivalent to at least 6–9 months of expenses and EMIs is also advisable, especially given potential uncertainties in interest rate cycles.

For existing borrowers, this is a good time to review loan terms and explore options such as balance transfer or rate renegotiation if they are paying higher interest rates. Increasing EMI amounts in line with income growth and making early-stage prepayments can significantly reduce the loan tenure and total interest outgo. Additionally, borrowers should closely monitor any extension in tenure due to rate changes and maintain a strong credit profile to benefit from better refinancing opportunities in the future.

Experts say stable rates combined with growth optimism could give a timely push to the real estate sector amidst the global uncertainties.

Kamlesh Thakur, Co-Founder & Managing Director, Srishti Group says, “The real estate sector benefits greatly from policy stability, and the current outlook provides that reassurance.”

With inflation projected at manageable levels and growth holding firm, we anticipate sustained traction in housing demand, particularly in emerging micro-markets and affordable housing segments, where affordability remains key.

Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory says, “The RBI’s decision reflects a fine balance between inflation management and sustaining growth momentum amid global uncertainties. While rising crude prices and currency pressures remain concerns, India’s economic resilience continues to stand out.”

For the real estate sector, stability in rates coupled with a strong GDP outlook of 6.9 per cent will support buyer confidence, especially in the mid-income and premium housing segments.

Shraddha Kedia-Agarwal, Director, Transcon Developers, “The RBI’s outlook highlights India’s strong growth fundamentals despite global headwinds. For the housing sector, a stable interest rate environment is critical in sustaining buyer sentiment. With inflation expected to remain within a manageable range, we believe homebuyers, especially in the luxury and aspirational segments, will continue to make investment decisions with confidence.”

This policy reinforces the sector’s positive momentum.