Relief for Homebuyers: RBI Holds Key Interest Rate at 5.5%, EMIs Remain Stable
In good news for homeowners and property buyers, the Reserve Bank of India (RBI) has decided to keep its policy interest rate (repo rate) unchanged at 5.5% for the second time in a row.1 The decision, announced by RBI Governor Sanjay Malhotra following the Monetary Policy Committee (MPC) meeting on October 1st, cited ongoing concerns over global economic volatility and tariff uncertainties.2
For the real estate sector, this decision translates directly into stable home loan EMIs.3
What the Stability Means for Real Estate
Real estate experts agree that maintaining the current repo rate offers predictable stability, which is highly beneficial for market sentiment:4
- For Existing Borrowers: There will be no immediate change in current home loan EMIs, providing financial certainty.5
- For New Buyers: Loan interest rates will hold steady, which helps sustain buyer confidence, particularly as the crucial festive season gets underway.6 Anuj Puri, Chairman of ANAROCK Group, affirmed that this stability sustains buyer sentiment but pointed out that it does not actively improve housing affordability.7
- For Developers: Predictable borrowing costs are crucial for planning capital-intensive projects, which is expected to drive investment across the real estate and infrastructure sectors.
“The Reserve Bank’s decision to hold the repo rate steady at 5.5% ensures continuity in the current borrowing environment.8 This stability comes as a positive for homebuyers, especially during the festive season when purchase intent is at its peak,” said Praveen Sharma, CEO, REA India (Housing.com).9
Why the RBI Held the Rate
The RBI’s decision reflects a cautious and measured approach. While some high-frequency data and low inflation figures suggested a case for a rate cut, the MPC is focusing on foundational drivers:10
- Global Uncertainty: Volatile global economic conditions and trade uncertainties necessitate a cautious stance.
- Waiting for Transmission: The committee is focusing on allowing the full effect of the previous 100 basis points (1%) rate cut to transmit through the financial system.
- GST Impact: The RBI is also waiting for the “game-changing impact” of the recent GST rationalization on construction materials to fully take effect, according to Samantak Das, Chief Economist, JLL.11
Das noted that a rate cut combined with GST reforms would have provided a significant boost to the residential market, especially the affordable and mid-income segments that showed early signs of slowing in mid-2025.
Looking Ahead: Hopes for a Rate Cut
While most industry leaders welcomed the stability, many are holding out hope for a rate cut in the next MPC meeting to further boost affordability.12
G. Hari Babu, National President of NAREDCO, urged the RBI to consider bringing the repo rate below 5.5% next time. He stressed that lower interest rates would:
- Strengthen homebuyers’ confidence and increase demand.
- Reduce EMIs on housing loans, enhancing the purchasing power of middle-class families.
- Benefit allied industries like cement, steel, and interiors.
For now, the status quo is set to ensure a stable and balanced growth trajectory for the real estate ecosystem, benefiting both developers and buyers as they step into the crucial festive quarter.13