Real estate leaders anticipate stronger housing demand following the Reserve Bank of India’s (RBI) unexpected 50 basis point repo rate cut. This reduction follows a 28 percent drop in housing sales in major Indian cities during early 2025. High property prices and global uncertainties contributed to this decline.
Experts suggest that a total of 100 basis points in rate cuts this year could lower borrowing expenses and monthly payments for homebuyers. Home loan rates, currently around 8.5 percent, may decrease to 8 percent as banks pass on these savings. Lower monthly payments are expected to boost buyer confidence, encouraging new buyers into the market.
This rate cut offers a prime opportunity for those looking to buy a home. Industry figures foresee more buyer interest and successful sales as monthly payments become more manageable for aspiring homeowners. The rate reduction is anticipated to most benefit demand for affordable and mid-range homes, which have recently struggled with falling sales.
Previously, housing market growth focused on luxury properties, while lower-priced segments showed weakness. This rate reduction should boost the real estate sector by increasing lending, speeding up purchases, and encouraging development. Affordable housing sales and supply have significantly decreased in recent years.
The lower borrowing costs make home loans more affordable, potentially increasing demand, particularly in the affordable and mid-income markets. The RBI also reduced the cash reserve ratio by 100 basis points, which should provide developers with more funding to complete projects on time. This move is expected to increase money available for lending.
Industry experts believe the rate cut will decrease developers’ borrowing costs amid rising construction expenses. They hope banks will quickly lower their lending rates, reducing long-term borrowing expenses for developers.
Lower borrowing costs should improve the financial feasibility of major projects.