The Reserve Bank of India (RBI) has cut its repo rate by 25 basis points, lowering it from 5.5% to 5.25%, RBI Governor Sanjay Malhotra announced today. The move, aimed at supporting economic growth, comes despite concerns over the rupee’s recent slump.
The decision was unanimous, following a three-day Monetary Policy Committee (MPC) meeting, which assesses the central bank’s policy every two months. Earlier, in June, the MPC had reduced the rate from 6% to 5.5% amid easing inflation. This latest cut is expected to lower borrowing costs, making home, vehicle, and other loans more affordable for retail borrowers.
Leaders across residential, commercial and investment segments see it as a timely move that improves affordability, strengthens sentiment and reinforces confidence in the country’s economic trajectory.
A Tailwind for Homebuyers and Developers
Samir Jasuja, Founder & CEO of PropEquity, NSE-listed real estate data analytics firm, notes that lower rates will help households ease EMIs and unlock higher consumption. “The rationalisation of GST rates by the government is a welcome move towards reducing compliance and thereby ease of doing business in the country. The reduction in rates across a host of items will give a spur to consumption, savings and investment by households, in turn enabling them to reduce their EMI burdens. This coupled with falling home loan rates will bring the much-needed cheer in the upcoming festive season and beyond. The overall impact of this move will translate into higher GST collections, more government spending and higher economic growth.”
Shrinivas Rao, FRICS, CEO of Vestian, says the rate action shows clear intent to support growth. “For commercial real estate, lower funding costs and improved leasing activity are likely to fast-track occupier expansion and support new developments. This also brings better clarity for long-term investments and encourages broader credit expansion. Capital-intensive sectors and housing will particularly benefit from improved affordability. Such a calibrated step strengthens economic stability and supports the ongoing growth momentum.”
Support for Residential Demand Across Segments
A large part of the industry’s optimism stems from the direct benefit to homebuyers. With prices having risen across major cities through the year, developers believe a softer rate cycle is what fence-sitters needed.
Piyush Bothra, Co-Founder & CFO of Square Yards, says, “Despite the sliding rupee and other headwinds, this cut is a very strong signal by the RBI about the strength of the Indian economy and its decoupling from the rest of the world macro. This cut offers a meaningful boost to the real estate sector, reinforcing affordability at a time when buyer activity is already strengthening. With inflation well-managed, growth projections improving, and reforms sustaining consumption, the rate reduction builds positively on the earlier easing undertaken this year.”
Colliers India’s National Director & Head of Research, Vimal Nadar, highlights the broader macro backdrop. “This reduction in benchmark lending rates, coupled with the continuation of neutral stance, reflects the confidence in India’s economic resilience despite global uncertainties and a depreciating Rupee. GDP growth rate projection for FY 2025-26 has been revised upwards from 6.8% to 7.3%, supported by robust domestic demand & private consumption. Meanwhile consumer inflation is expected to remain benign at 2% during the ongoing fiscal year.”
For the real estate sector, especially the residential segment, this rate cut builds on the momentum created during the recent festive season and GST rationalization of key construction materials. Lower borrowing costs will further improve affordability and buyer sentiment, particularly in affordable & mid-income housing segments. Additionally, steady growth in average income levels can potentially drive property enquiries and boost housing sales in the next few quarters,” Vimal added.
Amit Goyal, Managing Director, India Sotheby’s International Realty, adds that cheaper credit “boosts confidence, from homebuyers to institutional investors and should drive demand, transactions, and price stability. With India posting 8.2 percent growth in Q2, the rate cut is a strong sail forward, reinforcing liquidity and sentiment in an already resilient economy.”
A Boost to Market Liquidity and Construction Activity
The other major thrust of the rate cut is improved access to capital. With developers facing elevated construction costs, cheaper borrowing can speed up execution.
Aman Shah, Head Research at Equirus Family Office, links the move to broader liquidity measures. “The RBI also announced liquidity measures including Rs. 1 trillion of OMO purchases and a $5 billion FX swap signal the central bank’s intent to smoothen liquidity and strengthen credit transmission so borrowers fully benefit from lower rates. We expect inflation to gradually move toward the RBI’s long-term 4% target in FY27, which should provide a favourable backdrop for corporate profitability. Historically, Indian equities have closely tracked nominal GDP growth, and a moderate rise in inflation would help push nominal GDP back into double-digit territory. Despite global headwinds, the Indian economy has remained resilient, and equity valuations appear more attractive than last year. The RBI’s dovish approach aimed at stimulating demand and injecting liquidity should further reinforce the growth outlook. Additionally, the announced OMO programme is likely to exert downward pressure on G-sec yields, potentially guiding them toward the 6% level over the course of this financial year.”
For developers, this widening of liquidity channels can make a tangible difference.
Jash Panchamia, Executive Director of Jaypee Infratech Limited, says the cut “is expected to stimulate consumption across sectors… The housing sector, particularly affordable and mid-segment housing, stands to benefit as lower home loan rates are likely to encourage cautious buyers to make their purchase decisions.”
Shiv Garg, Director of Forteasia Realty, notes that access to working capital will improve. “The Reserve Bank of India (RBI) has decreased the policy rate to 5.25% and made a bold statement by adopting the theme of growth support. The developers will be able to get working capital more easily, which will, in turn, make it possible for them to get their projects financed and thus, speed up the construction of townships, plotted, and large integrated projects that are heavy on capital expenditure. Lowering the monthly home loan EMI by Rs. 1,850 for a 20-year Rs. 35 lakh loan will make housing more affordable. It will happen at the time when banks and NBFCs are lowering their loan rates, and the developers with strong balance sheets can refinance at lower costs and pass on the benefits to the buyers in terms of limited-time offers and schemes. This policy measure, along with an upgraded FY26 GDP forecast, will usher in a new cycle of launches, the consolidation of weaker players, and increased institutional investment in residential, commercial, and warehousing assets.”
Renewed Confidence in Tier II and Tier III Markets
The acceleration of homebuying demand beyond metros remains a consistent theme.
Anurag Goel, Director of Goel Ganga Developments, believes the cut will push undecided buyers to convert their inquiries into bookings. “The combination of lower EMIs and a more optimistic growth outlook creates a perfect timing for the end-users in the affordable and mid-income segments, particularly in Tier II and III cities where EMI sensitivity is high. This act can spark a revival in the areas where the price hike was already felt, and at the same time, it would contribute to pro-cyclical and healthy upcycling rather than speculative froth.”
Pramod Kumar Gupta of Kadamashree Developers sees the shift as attractive for investors as well. “Investors are likely to see Grade A residential, commercial strata units and listed REITs as the new places for superior risk-adjusted returns and regular cash flows as safer instruments yields go lower. The increased FY26 GDP growth expectancy points to a long-lasting demand situation for the likes of office, retail and logistics that will in turn support rental growth and reduced vacancy rates midterm. The policy change is like rolling out the carpet for homebuyers and investors who think long-term as it indicates the start of a friendly interest rate cycle where getting in on quality assets during the rise could provide both capital appreciation and income stability for the next 3–5 years.”
Impact on Investors and Fixed-Income Savers
The rate cut also forces a rethink for fixed deposit investors. Shashank Gupta, Director of RPS Group, says FD returns will inevitably drop. Instead of panic, this is the right time to think in a strategic way.
“The Reserve Bank of India (RBI) has cut the repo rate again, which means that in the long term, fixed deposit (FD) investors will have to accept that their once attractive returns are going to be lower. Instead of panic, this is the right time to think in a strategic way. One of the best means is FD laddering: dividing the investments into different tenures so that not all the deposits will be locked at the current lower rates, and there will always be some maturities ready to take the rates if the cycle changes. Senior citizens can choose a combination of bank FDs, high-rated corporate FDs, and small savings schemes for safety with slightly higher yields instead of depending on just one product. On the other hand, Rs 1,850 will be the drop in monthly home loan EMI for a Rs. 35 lakh loan over 20 years, which is a support for the borrowers,” Shashank said.
Siddharth Maurya, Founder & Managing Director of Vibhavangal Anukulakara, echoes the same, advising savers to diversify maturities and products.
He says, “The cut in the repo rate by the RBI once more signifies the end of very appealing fixed deposit returns for FD investors, at least for a while. Don't panic; instead, this is the right moment to act wisely. For example, you can consider FD laddering as a practical measure: divide your money among various periods so that not all the deposits grow at today's lower rates, and at the same time, there are some maturities which are always coming up to get the better rates if the cycle turns. This way, senior citizens can also opt for a combination of bank FDs, a few corporate FDs, and small savings schemes to get a blend of safety and slightly higher yields rather than sticking to a single product.”
Manju Yagnik, Vice Chairperson of Nahar Group and Senior Vice President of NAREDCO- Maharashtra, said, “A 25 basis point rate cut at this stage will meaningfully support homebuyer sentiment and improve affordability across categories. Over the past few quarters, demand has remained resilient despite elevated prices, and a reduction in borrowing costs will give fence sitters the confidence to move ahead with their purchase decisions. The real estate sector has been navigating higher input costs and currency-linked inflation in materials, so a softer rate environment will ease financial pressure for both buyers and developers. With inflation stabilising and growth remaining strong, this rate cut sends a constructive signal that supports long term housing demand and keeps the momentum intact across mid, premium and luxury segments.”
Balanced Benefits for Buyers at Home and Abroad
For NRIs, the weaker rupee offers additional incentive. Dharmendra Raichura, VP and Head of Finance at Ashar Group, explains, “The rate cut to 5.25% gives an immediate boost to affordability for home‑buyers, leading to stronger demand and improved confidence in the real‑estate sector. At the same time, the depreciation of the rupee makes imported building materials costlier, a challenge for developers’ margins. However, for NRIs and foreign‑remittance‑based buyers, the weaker rupee makes Indian real estate more attractive and affordable, balancing demand dynamics. In this context, developers who manage cost inflation smartly, while catering to a growing base of buyers with foreign‑currency incomes, stand to benefit from improved sales velocity and broader market participation.”
Stronger Sales Outlook for 2026
Industry leaders expect the current momentum to carry into the new year. ANAROCK Chairman Anuj Puri says, “The RBI’s decision to cut the repo rate by 25 bps is a distinct positive for the Indian real estate sector as we close 2025. Coming on the back of earlier easing cycles this year, this move further sweetens the value proposition for homebuyers, particularly in the affordable and mid-income segments which are highly sensitive to interest rate fluctuations. With average housing prices across the top 7 cities having risen by notable double-digits (approx. 10%) in 2025 as per ANAROCK Research, this rate cut provides a critical cushion to affordability, potentially bringing home loan interest rates to more attractive levels. This can encourage aspiring homebuyers who had paused their decisions due to price hikes to finally take the plunge.”
Puri added that the rate cut is a distinct sentiment multiplier for year-end sales. However, the real impact hinges on the effective transmission of these benefits. If banks swiftly pass on this rate cut to borrowers, we anticipate a renewed surge in sales velocity carrying firmly into Q1 2026. The current trends indicate that luxury homes will continue to drive residential real estate in 2026, as well. Demand for affordable and mid-segment homes remains strong in the country, but is hamstrung by high prices impacting affordability. This rate cut can potentially bring at least some fence-sitters to the market.
Aniruddha Mehta, CMD of Umiya Buildcon, adds, “We anticipate as demand continues to improve, the speed of real estate sales will continue to increase, confidence in the market will grow, and the overall growth outlook… will be improved as we move towards 2026.”
“This cut gives developers improved access to capital and reduced financing costs, allowing them to more easily plan their cash flows, and provides them with the capital needed to launch new projects,” Aniruddha added.
Dr. Samantak Das, Chief Economist at JLL India, calls the move a “powerful, proactive signal… This is the catalyst needed to revive purchasing power and activate the crucial segment of first-time affordable and mid-market homebuyers.”
“We have been observing price resistance in the affordable and mid-segment housing categories, with our estimates projecting residential sales in 2025 to be 8-9% down from last year's robust 300,000+ units (in the top seven markets of India). Given the high penetration of external benchmark-linked loans, the transmission to homebuyers is expected to be quick, providing tangible EMI relief that directly addresses this affordability challenge. We anticipate this will not only invigorate demand in the top metro areas but also significantly boost the burgeoning housing markets in Tier 2 and Tier 3 cities. For developers, this final easing bullet significantly lowers the cost of capital, encouraging accelerated execution of planned inventory, particularly in the affordable housing segment. This ensures that 2026 kicks off with renewed, broad-based residential momentum. On the commercial front, the lower cost of capital for developers encourages faster project completions and new launches. This aligns perfectly with the unabated expansion of Global Capability Centres (GCCs) and the government's 'Make in India' initiative, ensuring supply can meet the high-velocity demand. Ultimately, this move underwrites a confidence-driven surge in real estate activity and enhances the long-term investment potential of the asset class for both domestic and global players.”
Knight Frank India Chairman Shishir Baijal sees it as a boost to affordable and mid-income housing that had slowed in recent quarters.
He added, “We welcome the RBI’s positive move to cut rates by 25 bps, as it signals growing confidence that inflation will remain low on a durable basis. The decision also reflects a greater willingness to support growth more assertively. The reduction in borrowing costs should offer timely relief to the real estate sector, where lower home loan rates can help sustain momentum in end-user demand and improve developers’ cost structures. We hope this will be instrumental in boosting affordable and mid-income housing sales, which have been witnessing a sequential decline over the past few quarters.”
Vijay Wadhwa, Chairman of The Wadhwa Group, believes the impact will be meaningful for key markets in Mumbai and its expanding periphery. “The reduction in repo rate, though measured, is a timely step that strengthens momentum in the housing sector. A decrease of 25 basis points can meaningfully influence sentiment, especially for first-time and end-use buyers, and may stimulate incremental investment appetite. The RBI’s decision to bring the repo rate down to 5.25%, alongside raising the GDP growth outlook to 7.3%, reinforces confidence in the broader economic trajectory and is expected to ease EMIs for millions of households. With inflation comfortably moderated and economic growth well supported, the easing of borrowing costs is likely to encourage families to advance their home-buying decisions. In pivotal markets like Mumbai, along with fast-growing destinations such as Panvel and Karjat, this welcoming policy move is expected to accelerate demand for well-planned, future-ready residential communities. Real estate is a long-term asset class and benefits most from steady, predictable policy movement rather than abrupt shifts. If the direction holds, we anticipate further improvement in affordability, deeper institutional confidence, and continued consolidation of developers who operate transparently and at scale.”
A Calmer Rate Environment Ahead
Taken together, the industry voices point to a clear shift: the easing cycle is building confidence at every level of the real estate chain. With buyers gaining purchasing power, developers improving cash flows and investors seeing long-term opportunity, the sector enters 2026 with broad-based momentum and a clearer runway for growth.
