Impact of repo rate cut on Real Estate industry

Mumbai: On December 5, the RBI announced a 25-bps cut in the repo rate reducing it from 5.50% to 5.25%, making a total reduction of 125 basis points in 2025. Throughout 2025, the government policies including GST 2.0, RERA strengthening and repo rate reductions has worked in the favour of the Real Estate sector making buyer confidence higher than the previous years.

Homebuyers will be directly benefitted by this rate cut as home loan rates are expected to drop further. Monthly EMIs will also reduce, making homes more affordable. Families looking at mid segment or affordable homes stand to benefit the most. Many home buyers who postponed decisions because of high rates now should find properties within budget. With the upcoming festive season along with this rate cut is expected to push fresh bookings in the first quarter of 2026.

Real Estate Developers welcome this rate cut decision as this means lower construction finance and land acquisition loans, reducing the overall project costs. Affordable and Mid Income housing segments are likely to witness increased demand.

Talking to Bizz Buzz, Jitender Yadav, Director, Roots Developers says, “The RBI’s decision of reducing repo rate at 5.25% by 25 bps, is a catalyst for renewed enthusiasm in the real estate sector. Lower borrowing costs will make home loans more affordable which will increase demand of home buyers.”

This will also help developers to speed up project launches and improve completion timelines, strengthening an environment of growth and confidence across key housing markets.

Rajat Bokolia, CEO, Newstone says, “The rate cut will improve the situation of homebuyers as there will be a moderation in interest rates on home loans, making housing an accessible option.“

Refinancing the existing home loans will be easier as the EMIs on loans will also reduce.

Manik Malik, CEO, BPTP says, “It is a positive news for homebuyers, making it a lenient approach on the part of the committee. The approach will give way to affordable EMIs and housing loans. For more economical options, homebuyers in this scenario can also opt for floating rate loans.”

The real estate sector appears headed for a strong phase ahead. Residential demand is expected to remain increased across major metro cities and emerging Tier 2 locations.

Commercial spaces, including offices and retail, should also attract renewed investor as borrowing becomes less expensive. With the RBI maintaining a growth supportive stance and inflation under control, market sentiment stays positive.