RBI’s 25-bps rate cut set to boost homebuyer demand; real estate growth in 2026

The RBI’s decision to cut the repo rate by 25 basis points to 5.25%—completing a 125 bps reduction in 2025—has ignited fresh optimism in the real estate sector. With home loan rates expected to decline, EMIs will ease, making mid-segment and affordable homes more accessible to buyers who had postponed purchases.

Developers, too, welcome the move as cheaper construction and land-acquisition finance will accelerate project launches and improve delivery timelines.

As festive demand nears, both residential and commercial segments are poised for a strong first quarter of 2026, backed by supportive government policies, controlled inflation, and rising buyer confidence

Mumbai: On December 5, the RBI announced a 25-bps cut in the repo rate, reducing it from 5.50 per cent to 5.25 per cent, 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 favour of the Real Estate sector, making buyer confidence higher than the previous years.

Homebuyers will be directly benefit 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, it 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 per cent 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 the demand for 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, BPTPsays, “It is 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 investors as borrowing becomes less expensive. With the RBI maintaining a growth supportive stance and inflation under control, market sentiment stays positive.