Real Estate Sector Anticipates Further Rate Cuts from RBI MPC

The real estate sector remains optimistic ahead of the RBI MPC's upcoming decision, hoping for continued rate cuts to boost housing demand and affordability.

Real EstateRbiMpcHome LoansInterest RatesReal EstateAug 05, 2025

Real Estate Sector Anticipates Further Rate Cuts from RBI MPC

Real Estate:Every alternate month, the Reserve Bank of India’s Monetary Policy Committee (MPC) convenes to evaluate the country’s macroeconomic conditions and determine key policy rates aimed at maintaining inflation within target and supporting economic growth.

Various sectors of the economy closely monitor the MPC’s decisions, as changes in policy rates can significantly influence borrowing costs, investment sentiment, and overall demand. For the real estate sector, in particular, fluctuations in interest rates have a direct impact on home loan affordability and consumer confidence.

The housing sector has experienced a renewed surge in momentum following the cumulative 1% reduction in the repo rate between February and June 2025, according to real estate experts. The decline in home loan rates has enhanced affordability and revitalized buyer sentiment across key markets.

With borrowing costs on the decline, industry leaders anticipate that housing demand will remain robust. Many believe that with inflation under control, the RBI may have the flexibility to provide further support to boost the real estate sector.

Mr. Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd., stated, “With inflation staying well below the RBI’s target, there is still room for a consecutive fourth cut in the repo rate to boost consumption in the economy. A 25-bps cut in the repo rate would definitely give a further boost to the real estate market, as it would bring the repo rate down by 125 bps from the previous year. With several commercial banks already offering loans below 8 percent, an additional repo rate cut would further ease credit and prompt end-users to advance their home buying decisions.

Having said that, it would be important for the RBI to carefully assess overall economic conditions before making a decision. Even if the RBI decides to keep the rates unchanged, the current low-interest rate environment is already providing strong support to housing demand. Positive buyer sentiment, better affordability, and easy loan availability are together helping the real estate market maintain its growth momentum.”

Mr. Jash Panchamia, Executive Director, Jaypee Infratech Limited, remarked, “The RBI adopted a neutral stance in its previous policy review, and it remains to be seen whether the central bank will go for a rate cut or maintain the status quo. With inflation currently at a six-year low, a 25-basis-point cut in the repo rate would be encouraging for the overall economy. The real estate sector, having already benefited from the previous three consecutive rate cuts, would see a further boost in demand and buyer confidence if another cut is announced.

Such a move would reinforce the current growth momentum in the housing market. It would support end-users and first-time homebuyers by lowering borrowing costs and making home ownership more accessible across segments. Overall, the real estate sector remains well-positioned to benefit from a supportive rate regime.”

Mr. Ashok Kapur, Chairman, Krishna Group and Krisumi Corporation, noted, “The housing sector has already been benefiting from the cumulative 100 bps cut in the repo rate, as reflected in the rising consumer demand driven by lower home loan interest rates. If the RBI decides to further reduce the repo rate by 25 bps in its upcoming policy review, it would give an overall boost to the economy and further support demand across sectors, including real estate.

Lower home loan rates always give an impetus to housing demand by improving affordability and encouraging more buyers to enter the market. With positive consumer sentiment prevailing, the housing sector is well-positioned to maintain its growth momentum, driven by strong end-user interest and improved access to credit.”

Mr. Raoul Kapoor, Co-CEO, Andromeda Sales and Distribution Pvt Ltd, observed, “So far this year, the RBI has cumulatively reduced the repo rate by 100 basis points across the last three policy reviews. While the first two meetings each saw a 25-basis point cut, the central bank surprised the market in the last MPC by delivering a sharper-than-expected 50 basis point reduction.

Looking ahead, it is unlikely that the RBI will opt for another aggressive rate cut in the upcoming review. However, with inflation remaining below expectations, geopolitical tensions easing, and the domestic economy showing signs of resilience, a moderate 25 basis point cut remains a strong possibility. If implemented, such a move could provide a further boost to retail borrowing—especially timely with the festive season on the horizon, traditionally a high-demand period for consumer spending and housing purchases.”

Mr. Vikas Bhasin, MD of Saya Group, expressed, “We are hopeful that the RBI will continue the rate cut cycle and may opt for another reduction of 25–50 basis points in the repo rate in the upcoming MPC meeting.

The cumulative rate cut of 100 basis points this year has already led to a significant reduction in home loan rates for borrowers. A further rate cut will make home loans more affordable and enhance the loan eligibility of home buyers. This will benefit buyers across all segments—from affordable to luxury—throughout the country. We expect this to further boost the demand for homes in the coming months.”

Mr. Sushil Bedarwal, CMD, Bedarwal Group, commented, “The RBI’s cumulative repo rate cut of 100 basis points so far this year has brought substantial relief to homebuyers, particularly in the affordable and mid-income housing segments. These categories are largely driven by end-users with limited budgets, making lower interest rates a critical factor in improving affordability.

Given the commentary in recent MPC meetings—where the RBI Governor has clearly indicated room for further easing—we anticipate another 25-basis point rate cut in the upcoming review.

We also hope that banks will promptly pass on the benefits of any further reduction to borrowers. Lower home loan rates directly enhance the purchasing power of aspiring homeowners, helping many take a decisive step toward owning their dream home.”

Frequently Asked Questions

What is the MPC and what does it do?

The MPC, or Monetary Policy Committee, is a body within the Reserve Bank of India (RBI) responsible for setting key policy rates, such as the repo rate, to control inflation and support economic growth. It meets every alternate month to assess the country’s macroeconomic conditions.

How do changes in the repo rate affect the real estate sector?

Changes in the repo rate directly influence home loan interest rates. A reduction in the repo rate typically leads to lower home loan rates, improving affordability and boosting buyer confidence, which in turn increases demand in the real estate sector.

What is the current sentiment in the real estate sector regarding the upcoming MPC meeting?

The real estate sector is optimistic about the upcoming MPC meeting, hoping for further rate cuts to continue boosting housing demand and affordability. Industry leaders believe that a 25-basis-point cut in the repo rate would provide additional support to the market.

How have previous rate cuts impacted the housing market?

The cumulative 100 basis points cut in the repo rate this year has significantly reduced home loan interest rates, leading to improved affordability and increased consumer demand for housing. This has helped the real estate sector maintain its growth momentum.

What are the potential benefits of a further rate cut for homebuyers?

A further rate cut would make home loans more affordable and enhance the loan eligibility of homebuyers. This would particularly benefit end-users and first-time homebuyers, making home ownership more accessible across various segments of the market.