RBI Maintains Repo Rate at 5.5%: Implications for the Housing Market
The Reserve Bank of India (RBI) has decided to maintain the repo rate at 5.5%, providing stability and predictability for the housing market. This move ensures consistent growth and affordability for homebuyers.
Repo RateRbiHousing MarketReal EstateEconomic GrowthReal Estate NewsAug 06, 2025
The repo rate is the interest charged by the RBI to banks and financial institutions for short-term loans in India. A lower repo rate fosters economic growth, while a higher repo rate can slow it down. According to Malhotra, even with uncertainty surrounding the tariff situation, the neutral policy stance will continue. The interest and welfare of Indian citizens remain the top priority, he emphasized.
As per the August policy, the Bank Rate and the Marginal Standing Facility (MSF) remain unchanged at 5.75%. The Standing Deposit Facility (SDF) stands at 5.25%. The GDP growth projection for FY26 is expected to be around 6.5%.
What Does the Unchanged Repo Rate Mean for the Real Estate Segment?
The unchanged repo rate is expected to provide continued relief to the real estate segment. Here are some insights from industry experts:
Praveen Sharma, CEO, REA India (Housing.com)
The RBI’s decision to maintain the repo rate at 5.5% reflects a balanced and prudent stance, coupled with positive guidance on inflation and GDP. This pause allows time for the full transmission of the 100 basis point rate cut implemented since February 2025. As monetary easing continues to flow through the system, it is expected to bolster housing affordability—especially amid a sustained rise in average costs over the past 18 months—and support buyer sentiment during the upcoming festive season. Policy stability also reinforces confidence among homebuyers and developers alike, underpinning steady growth in the residential real estate sector amid ongoing urbanization and evolving consumer aspirations.
Pramod Kathuria, Founder & CEO, Easiloan
The RBI’s decision to hold the repo rate at 5.5% with a neutral stance is an indication of a stable and accommodative monetary ecosystem. This stability ensures that the recent 100 bps rate cut can permeate deeper in the credit markets to the advantage of both lenders and borrowers. For the housing loan market, a stable interest rate scenario ensures risk-free choice for homebuyers and consistent growth for the housing market. We view this as a positive development that will further drive momentum in real estate and home finance at Easiloan.
Chintan Sheth, Chairman and Managing Director, Sheth Realty
The RBI’s repo rate cut comes as a timely move for Mumbai’s real estate industry, unlocking rapid relief for homebuyers through reduced EMIs and encouraging investment sentiment amongst them. The strategic action not only uplifts affordability but also accelerates project execution and redevelopment momentum across the city. We witness this as an opportunity to fast track consciously designed homes that sync in with the evolving lifestyle aspirations, additionally contributing to Mumbai’s urban transformation and making aspirational living more attainable for a wider segment of buyers.
Dharmendra Raichura, VP and Head of Finance, Ashar Group
The RBI’s decision to hold the repo rate at 5.5% signals a sensible, growth-focused stance in the face of easing inflation and an uncertain global outlook. Following the recent 25% tariff imposed by US President Trump, which has added pressure to the economic cycle, maintaining rate stability provides much-needed reassurance, especially for interest-sensitive sectors like real estate. For homebuyers, unchanged rates ensure continued affordability of home loans and support plans to upgrade to larger, future-ready homes. This steady policy direction is set to further strengthen the growth witnessed in dynamic markets such as MMR and Thane over recent quarters. We believe that a stable monetary environment, combined with rising incomes and sustained infrastructure development, will keep housing demand healthy through FY25, as buyers increasingly seek reliable developers, superior construction quality, and long-term value from their real estate investments.
Shishir Baijal, Chairman and Managing Director, Knight Frank India
The RBI’s decision to hold rates steady underscores its calibrated approach amidst a complex economic backdrop. While inflation has moderated, it remains uneven, and the central bank is understandably cautious given the persistent risks from global commodity prices, geopolitical tensions, and volatile capital flows. For the real estate sector, the continuation of stable policy rates and surplus liquidity conditions provides much-needed predictability and helps preserve affordability for homebuyers. Notably, some banks have already reduced consumer home loan rates—a move that supports housing demand, especially in the mid-income and low-income segment—and more transmission in interest rates is underway. This policy continuity, coupled with easing credit conditions and steady economic growth, can provide a boost to the affordable housing categories.
Housing.com POV
The RBI, after cutting basis points between February and June 2025, opted for a wait-and-watch approach in August and left the repo rate unchanged at 5.5%. With home lending rates below 8.5% and the repo rate unchanged, homebuyers don’t have to worry about an increase in EMI in the near future and have sufficient time to plan their finances. While this decision was expected, a further cut in the repo rate would have lowered home loan rates even more. This would have attracted more first-time homebuyers and fence sitters to invest in the segment, and the festive season would have just added to the decision-making process.
Frequently Asked Questions
What is the repo rate?
The repo rate is the interest rate at which the Reserve Bank of India (RBI) lends short-term funds to banks and financial institutions. A lower repo rate fosters economic growth, while a higher repo rate can slow it down.
Why did the RBI maintain the repo rate at 5.5%?
The RBI maintained the repo rate at 5.5% to provide stability and predictability in the economic environment, allowing policymakers to assess the effects of recent rate cuts and to address ongoing global trade tensions and moderating inflation.
How does the unchanged repo rate affect the housing market?
The unchanged repo rate ensures continued relief for the housing market, making home loans more affordable and supporting buyer sentiment during the festive season. It also reinforces confidence among homebuyers and developers, underpinning steady growth in the residential real estate sector.
What are the implications of the unchanged repo rate for homebuyers?
For homebuyers, the unchanged repo rate means continued affordability of home loans and no immediate increase in EMIs. This provides them with the time to plan their finances and make informed decisions about purchasing a home.
What is the GDP growth projection for FY26?
The GDP growth projection for FY26, as per the RBI's August policy, is expected to be around 6.5%.
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