Stable Repo Rate Boosts Homebuyer Confidence in Real Estate Sector
The Reserve Bank of India's decision to maintain the repo rate at 5.50% is expected to bolster homebuyer confidence and support affordable housing demand, according to real estate industry leaders.
Repo RateReal EstateHomebuyersHousing DemandAffordabilityReal Estate NewsAug 06, 2025
The central bank has cut the policy repo rate by 100 basis points (bps) so far in 2025. That, coupled with efforts to maintain liquidity amid global uncertainties, may help housing affordability, they said.
“For the real estate sector, the continuation of stable policy rates and surplus liquidity conditions provide much-needed predictability and help preserve affordability for homebuyers,” said Shishir Baijal, chairperson and managing director (MD), Knight Frank India.
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, he said.
A stable rate environment and the benefits of previous rate cuts are expected to boost affordable and mid-income housing.
“With a cumulative rate cut of 100 bps since February 2025, the ongoing monetary policy transmission is gradually taking effect, and the full impact on the broader economy, including the real estate sector, is still unfolding,” said Venkatesh Gopalakrishnan, director group promoter’s office, MD - Shapoorji Pallonji Real Estate.
“From a housing perspective, especially in the affordable and mid-income segments, the current rate environment continues to offer conducive conditions for homebuyers. Steady interest rates help preserve affordability and sustain buyer sentiment, encouraging long-term investment in homeownership,” he said.
Industry experts believe that stable rates mean that attractive home loan rates will continue. State Bank of India, Punjab National Bank, and Canara Bank are among lenders that recently reduced home loan rates.
“The market’s current momentum is built on solid demand, and this decision allows that organic growth to continue without the market becoming overly dependent on rate cuts. Knowing that interest rates are stable gives both developers and buyers a clear runway for planning,” said Samantak Das, chief economist and head of research and REIS, India, JLL.
Indian real estate is “weathering unrelenting turbulence” due to US tariffs and a 20 per cent plunge in housing sales in top cities, according to Anarock, a real estate consultancy. As many as 96,285 homes were sold in the second quarter of 2025, down almost 20 per cent from the previous year (120,335 homes sold) to indicate increasing buyer hesitancy and market uncertainty.
Average prices for residential properties in the top seven cities have increased by 39 per cent in the last two years: from Rs 6,470 per square foot in the second quarter of 2023 to Rs 8,990 per square foot as of Q2 2025.
That said, overall, homebuyers are currently driven by long-term confidence rather than short-term rate fluctuations. Given the upcoming festive season, developers may look to keep the market momentum going with offers and flexible payment plans, which may help improve affordability for many genuine buyers, said Anuj Puri, chairperson of Anarock.
Pradeep Aggarwal, founder and chairperson, Signature Global (India), said the central bank’s unchanged policy stance will help the real estate sector’s growth. “With steady interest rates and strong consumer confidence, developers are expected to meet the sustained demand for quality housing through greater focus on new offerings,” he said.
Frequently Asked Questions
What is the current repo rate set by the Reserve Bank of India?
The current repo rate set by the Reserve Bank of India is 5.50 per cent.
How has the repo rate affected home loan rates?
The cumulative rate cut of 100 basis points since February 2025 has led to a gradual reduction in home loan rates, making housing more affordable for buyers.
Why is a stable repo rate important for the real estate sector?
A stable repo rate provides predictability, helps preserve affordability for homebuyers, and sustains buyer sentiment, encouraging long-term investment in homeownership.
What are some banks that have recently reduced home loan rates?
Some banks that have recently reduced home loan rates include State Bank of India, Punjab National Bank, and Canara Bank.
How are developers expected to support the real estate market during the festive season?
Developers are expected to keep the market momentum going with offers and flexible payment plans, which may help improve affordability for many genuine buyers.
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