Real Estate Bodies Anticipate 25 BPS Repo Rate Cut to Boost Housing Demand
The real estate industry, represented by CREDAI and Naredco, is optimistic about a 25 basis points reduction in the repo rate by the RBI. This move is expected to significantly enhance housing demand and affordability, benefiting both homebuyers and developers.
Repo Rate CutHousing DemandCredaiNaredcoReal Estate SectorReal Estate MumbaiJun 05, 2025
The RBI's Monetary Policy Committee (MPC) began its three-day meeting on Wednesday, with Governor Sanjay Malhotra scheduled to announce the decision on Friday. CREDAI National President Shekhar Patel expressed his hope for a 50 basis points reduction, stating that even a 25 basis points cut would greatly improve housing demand. Patel noted that the last three months have seen a slowdown in housing demand, and a rate cut would help immensely in boosting sales.
Naredco's National President G Hari Babu emphasized the importance of the RBI's monetary policy for the real estate sector. He explained that the sector closely monitors the RBI's decisions due to their significant impact on housing demand. In the current economic environment, where inflation is under control and macroeconomic indicators are stable, a repo rate reduction would provide much-needed relief to both homebuyers and developers by lowering borrowing costs and easing liquidity.
The real estate sector is a vital driver of the economy, with linkages to over 200 sectors, including cement, steel, furniture, and furnishings. Therefore, a cut in the repo rate would not only boost housing demand but also spur overall economic growth and generate large-scale employment, according to Hari Babu.
The RBI has already reduced the key interest rate (repo) by 25 basis points each in February and April, bringing it to 6 percent. This has led to a reduction in repo-linked external benchmark-based lending rates (EBLRs) and marginal cost of funds-based lending rate (MCLR) by most banks. As a result, housing loan outstanding has increased to Rs 30 lakh crore as of April 18, 2025, from Rs 27.41 lakh crore year-on-year, according to the latest RBI data.
Industry leaders are hopeful for a further rate cut, which would be highly encouraging for homebuyers and developers. Dhruv Agarwala, Group CEO of Housing.com, noted that a 25 basis points rate cut would enhance affordability and sustain demand, particularly at a time when early signs of demand tapering and rising input costs are being observed.
Bengaluru-based realty firm Sanjeevini Group Chairman and Founder, Umesh Gowda H A, mentioned that home loan interest rates have dropped below 8 percent in some banks, a positive sign of the timely transmission of the two repo rate cuts by the RBI. He expects another 25 basis points cut and hopes that more banks will quickly pass on the benefit to borrowers. This will provide relief to existing homebuyers in the form of reduced EMIs and encourage those who have been postponing their decision to buy a home.
Ashok Kapur, Chairman of Krishna Group and Krisumi Corporation, stated that the RBI's accommodative stance in previous policy reviews has been beneficial and expects another cut to provide further relief to various sectors of the economy. Garvit Tiwari, Director & Co-Founder of InfraMantra, believes a cut in interest rates will spur housing demand and encourage new entrants to make real estate purchases.
Realty firm Sikka Group MD Harvinder Sikka expects a rate cut to boost consumer sentiment and drive the real estate market forward.
Frequently Asked Questions
What is the expected reduction in the repo rate by the RBI?
The real estate bodies CREDAI and Naredco are expecting at least a 25 basis points reduction in the repo rate by the RBI to boost housing demand.
Why is a repo rate cut important for the real estate sector?
A repo rate cut is important for the real estate sector because it lowers borrowing costs, enhances affordability, and encourages homebuyers, thereby boosting housing demand and overall economic growth.
What impact has the previous repo rate cuts had on the housing sector?
The previous repo rate cuts have led to a reduction in repo-linked external benchmark-based lending rates (EBLRs) and marginal cost of funds-based lending rate (MCLR) by most banks, resulting in an increase in housing loan outstanding.
How will a further repo rate cut benefit homebuyers?
A further repo rate cut will provide relief to homebuyers by reducing EMIs and making home loans more affordable, which can encourage more people to enter the housing market.
What are the expectations from the RBI's monetary policy review?
The real estate sector is hopeful for a further repo rate cut, which would enhance affordability and sustain housing demand, particularly at a time when early signs of demand tapering and rising input costs are being observed.
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