Will repo rate cut lead to fall in interest rates? Reactions from Industry Experts
- Anmol Yadav
- Feb 7
- 7 min read
Updated: Feb 11
“The Reserve Bank of India’s decision to cut the repo rate by 25 bps to 6.25% is a welcome move that will significantly improve housing affordability, especially for middle-class families and first-time homebuyers. This monetary policy shift, combined with the Union Budget 2025’s progressive measures—such as the increase in the income tax exemption limit to ₹12 lakh and enhanced deductions on home loan interest—will boost consumer confidence and drive sustained demand in the affordable housing segment.
Lower interest rates directly translate into reduced EMIs, making homeownership more accessible for millions of aspiring buyers. However, the real impact will be felt when financial institutions proactively pass on these rate cuts to borrowers, ensuring that the benefits reach the grassroots level. Additionally, the government’s infusion of ₹15,000 crore into SWAMIH Fund 2 and its commitment to completing stalled housing projects will not only revive buyer confidence but also unlock significant value in the real estate sector.
Affordable housing remains a critical pillar of India’s growth story. The synergy between fiscal incentives, monetary easing, and regulatory support will catalyze not just homeownership but also broader economic development, job creation, and urban transformation. We remain optimistic about continued policy support that fosters a more inclusive, resilient, and growth-oriented real estate ecosystem.”
“We welcome new Governor Sanjay Malhotra and congratulate him on his first Monetary Policy Announcement. We are glad to hear the Monetary Policy Committee’s decision to The RBI's decision to cut the repo rate by 25 basis points to 6.25% aims to stimulate economic growth amid expectations of easing inflation. The recent budget has also played a crucial role in managing inflation by focusing on fiscal discipline and targeted spending. This as well enabled the RBI to manoeuvre a rate cut.
For the real estate market, lower borrowing costs are expected to boost demand for home loans, making housing more affordable and stimulating sector growth. This is a positive development for both homebuyers and developers, potentially leading to increased sales and new project launches. We hope interest rate cuts will be passed on to consumer and the home loan rates become more attractive which combined with the earlier announced tax incentives spur residential demand across the different price brackets, but especially in the below INR 50 Lakh category, which has seen continued weakening of demand.
This rate cut, the first one since May 2020, is likely to support slowing economic growth by boosting consumption and investment. Increased liquidity in the banking system will help address market constraints, benefiting sectors like infrastructure and housing.
Overall, the RBI's rate cut is a balanced approach to supporting growth while managing inflation and liquidity concerns, though the central bank must remain vigilant about the impact of the depreciating rupee.”
"The RBI’s decision to cut the repo rate by 25 basis points the first rate cut since 2020 is a significant move that will provide much-needed relief to home loan borrowers and give a strong boost to the housing sector. Lower interest rates directly enhance affordability, making home loans more accessible for aspiring homeowners and first-time buyers.
This decision aligns with the Finance Ministry’s recent budget announcement, which emphasized the need for fiscal and monetary policy to work in tandem to support economic growth. The rate cut is expected to drive renewed demand in the housing market, boosting overall sentiment and encouraging investments in the real estate sector.
We remain committed to supporting homebuyers with competitive loan offerings and seamless financing solutions, both in-person and digital, ensuring they can achieve their dream of homeownership. This rate cut, combined with the recent income tax relief, will further strengthen consumer confidence and contribute to sustained growth in the housing finance sector."
The RBI’s 0.25% rate cut after five long years—is the much-needed oxygen for the Indian economy, more particularly for the real estate sector.
It lightens EMIs, boosts investments, and signals a pro-growth stance. Coupled with income tax breaks for incomes up to ₹12 lakh in the Union Budget, it widens the path to homeownership for many aspiring buyers.
In line with expectations, RBI in its first MPC meeting after the Budget, has decided to reduce the repo rate by 25 basis points to 6.25%, the first rate cut in nearly five years, following a prolonged cycle of rate hike and stability triggered by global uncertainties. This comes in the backdrop of easing inflation and moderation in growth prospects. The Central Bank, however, maintains confidence on the robustness of domestic economy and projects the GDP growth rate at 6.7% in FY 2025-26. As housing demand had begun to stabilize after witnessing record sales in the last 2-3 years, this rate cut comes at an opportune time and will have a significant bearing on boosting homebuyer sentiments. The rate cut along with the recent budgetary announcements related to creation of Urban Challenge Fund and tax reliefs under the new regime, are likely to stimulate urban growth and enhance domestic consumption. Higher disposable income and lowering of financing costs stand to benefit homebuyers and developers alike. Furthermore, the recent allocation of INR 15,000 Crores for SWAMIH II fund is likely to expedite completion of stressed projects, boosting liquidity and spur home buying sentiments. Overall, evident tailwinds should boost real estate demand across asset classes in upcoming quarters.
"The RBI's 25 bps reduction in the repo rate was anticipated, given the slowdown in GDP growth to 5.4% in the second quarter of FY’25, marking the slowest expansion over seven consecutive quarters. This rate cut, the first in nearly five years, aims to bolster market liquidity. It's likely to buoy the real estate sector with expectations of major banks trimming mortgage rates. However, it is also expected to exert downward pressure on rupee value in international markets, barring foreign investments.”
"The Reserve Bank of India's decision to cut the repo rate by 25 basis points to 6.25% is a welcome move for the real estate market. This will lower borrowing costs for home buyers, making home loans more accessible and improving buyer sentiment. Additionally, it could enhance liquidity in the banking system, easing access to financing for developers. Combined with recent tax reforms, stable inflation projections and sustained economic growth, it will act as strong tailwinds for the residential real estate sector. Needless to say “acchhe din” for real estate will continue for a long time”
"The RBI's 25 basis point reduction in repo rate to 6.25% - a first in five years - comes at a crucial time for real estate. Given the strong investment flows we're seeing from the GCC region, this rate cut will naturally boost business activity by making borrowing more affordable. Further, as financing becomes more accessible for the developers with enhanced liquidity, we expect a surge in new planned ventures along with the initiation of new projects. This puts emerging IT hubs such as Gujarat in a favourable position, where demand for commercial spaces is growing at a noteworthy pace.
What's encouraging is that while luxury and premium housing have shown robust demand despite price appreciation, this rate adjustment should help drive growth in the affordable housing segment as well. Overall, we believe this policy shift will create positive momentum across both commercial and residential real estate, supporting long-term growth in our sector, mainly in Tier 2 and Tier 3 Cites.”
“Today's rate cut by 25 basis points after a gap of nearly five years is much in line with our expectations and set to provide an overall support as well as be a catalyst to growth enablers outlined in the recent union budget. The benefits of this rate cut will begin to accrue on an immediate basis and expected to be fully realized in next 3 to 6 months, benefiting customers. This step is in the right direction aligning with the sustained central bank assurance of proactive liquidity support and allay concerns of liquidity crunch, thereby accelerating growth.”
Mr. Ashwin N Sheth, Chairman and Managing Director, Ashwin Sheth Group stated, The RBI’s decision to cut the repo rate by 25 basis points, coming on the heels of the Union Budget 2025, would boost the real estate sector. We anticipate a strong surge in demand- especially in the mid and premium housing segments thanks to the revised tax slabs and reduced interest rates making home loans more affordable
Beyond immediate benefits, this move strengthens economic resilience, facilitates easier access to finance for developers, and enhances liquidity in the banking system. Additionally, we fully support the RBI’s emphasis on tackling digital frauds in real estate. The sector has long struggled with challenges like fake listings, impersonation scams, and fraudulent sales, this move will help to eradicate the ongoing risks. Ensuring a secure ecosystem for homebuyers and investors alike.
“The RBI’s decision to cut the repo rate by 25 bps to 6.25 % for the first time in 5 years underscores its commitment to financial stability while balancing inflation and growth. This is particularly significant for commercial real estate investors, as it ensures access to capital at predictable costs, allowing for long-term strategic investments in premium assets. With inflationary pressures moderating and liquidity remaining steady, investor confidence in structured real estate investments, including fractional ownership, is expected to strengthen. At hBits, we see this as a positive shift, as more institutional and retail investors look for stable, inflation-hedged assets with strong rental yields. Given the global economic uncertainties, commercial real estate remains a resilient and income-generating asset class, and the RBI’s policy direction will play a key role in shaping future investment trends in this space.”
“RBI decision to cut rates is in line with expectations. The dovish stance follows most global major central banks that have also cut rates or have shown an indication to do so. The rate cut will likely further narrow the US-India bond yield spread that is already at 20-year low, making the US bonds more attractive for foreign investors. This may lead to more outflows in coming months leading to investments into US bonds and stock markets. A weak rupee also makes a case for investing in US markets as investors will benefit from strong dollar. At the time Indian market has been struggling, investors should consider investing in global equities, especially US-listed, as they may not just provide alpha but also help diversify their portfolio. Domestic focused stocks in the US, such as utilities, steelmakers, etc. look attractive.”
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