As widely anticipated, the Reserve Bank of India (RBI) in its MPC meet on Friday opted to maintain its current stance on interest rates. That is because the central bank is facing challenges such as a depreciating Rupee, declining bond yields, ongoing inflationary pressures, and a slowdown in economic growth.
While the deceleration in growth is not yet a cause for alarm, it provides the RBI with sufficient flexibility to keep interest rates steady, prioritizing the management of inflation and the stabilization of the currency.
“Nonetheless, the ongoing transition towards a neutral policy stance indicates a gradual shift in the central bank’s priorities from solely controlling inflation to also fostering economic growth. At this juncture, a reduction in interest rates would be advantageous for consumers, particularly home buyers, as borrowing costs remain elevated despite the repo rate being unchanged. The growth rate of home loans has diminished, and there has been a notable decline in consumption among lower-income demographics, as evidenced by a significant drop in the sales of affordable housing,” observed Shishir Baijal, Chairman and Managing Director, Knight Frank India.
Also Read: No Change in Repo Rate: What it means for your home loan EMIs
Developers said the RBI decision bolsters the macroeconomic resilience of the Indian economy, fostering a stable environment for both businesses and consumers. While the focus is often on affordability, it is noteworthy that this policy indirectly enhances buyer confidence, especially in the affordable housing sector.
“By keeping home loan rates steady during a festive season marked by increased property demand, the RBI has successfully sustained vital momentum in housing sales. However, the implications extend beyond mere affordability; they also encompass the preservation of trust in long-term investments. Amidst global challenges, this policy solidifies India’s reputation as a dependable market for real estate investment, yielding significant advantages for first-time buyers and the broader housing ecosystem,” said Avneesh Sood, Director of the Eros Group.
Here’s what India’s leading developers said about the RBI decision to keep the repo rate unchanged:
Harinder Singh Hora, Founder Chairman of Reach Group: “An unchanged repo rate and a 50 basis points reduction in the Cash Reserve Ratio (CRR) to 4% could help improve liquidity in the banking system by allowing banks to lend more. This increased lending capacity can support the market’s momentum, benefiting developers and buyers by keeping interest rates stable and enhancing access to financing. As the market continues to evolve, the RBI’s strategic measures will play a key role in sustaining the growth of the real estate sector.”
Dr. Gautam Kanodia, Founder KREEVA and Kanodia Group: “The RBI decision to keep the repo rate unchanged bodes well for the realty sector as it will continue facilitating the stability in the realty market. For home buyers, it will enable sustained affordability in home loans further propelling the housing demand across segments. The decision of unchanged repo rate is a significant step towards the economic balance, propelling the long-term growth in the real estate market.”
Deepak Kapoor, Director, Gulshan Group: “The RBI move to keep the repo rate unchanged is a good move. Despite inflation being an area of concern, not only does it foster stability, but it also signals the direction towards the future, which will act as a major psychological booster for the sector. However, in light of the historical trend, the interest rates are still on the higher side. We hope that the 2025 MPC meetings will lead us towards repo rates between June and September 2022, when it hovered between 5 and 6 per cent.”
Manik Malik, CFO, BPTP: “The RBI decision to maintain the repo rate at its current level is a welcome move for the real estate sector, offering much-needed relief to both developers and homebuyers. Stable rates are likely to keep home loan interest rates steady, ensuring affordability for buyers and sustaining consistent demand across housing segments. This decision not only builds customer confidence, encouraging more investments in real estate, but also helps developers manage financial costs more effectively, enabling smoother project execution. Overall, it enhances market stability, fostering an environment that supports homeownership aspirations and drives long-term growth for the industry.”
Yashank Wason, Managing Director, Royal Green Realty: “We welcome the MPC decision to keep the repo rate unchanged. This reflects a strong commitment towards economic stability. The move is a positive note for the housing segment, which has lately showcased a robust performance. By keeping repo rates unchanged, the confidence among homebuyers continues to be stable, further encouraging a strong environment for potential home loan borrowers. This will further contribute to the real estate sector’s growth, positively influencing the country’s GDP and the economy.”
Sudeep Bhatt, Director Strategy, Whiteland Corporation: “The RBI decision reflects its commitment to fostering national growth through an expansionary policy. Stable home loan rates are expected to create a favourable environment for increased housing demand. In Gurugram’s luxury housing market, this decision is likely to drive substantial growth. Homebuyers now have an ideal opportunity to take advantage of the steady interest rates and turn their dream of owning a home into reality.”
Madhur Gupta, CEO, Hero Realty: “With the repo rate remaining unchanged at 6.5%, the real estate sector stands to benefit from continued stability. For developers, this means sustained demand for residential properties, particularly in the premium segment, as home loan rates stay attractive. This stability fosters confidence in the market, allowing developers to plan and execute projects that align with buyer preferences. The unchanged repo rate provides the assurance needed to drive more investment and development, ensuring the sector remains on a steady growth trajectory. As India’s economy expands, the real estate sector is playing a bigger role, with the unchanged repo rate helping to maintain demand and support the country’s economic progress.”
Vikas Garg, Joint Managing Director, Ganga Realty: “The RBI decision to keep the repo rate unchanged is a welcome move that aligns with expectations and reflects a thoughtful approach to the current economic landscape. With inflation moderating and real estate demand on an upward trajectory, this policy will foster growth across housing segments. It underscores the RBI’s commitment to balancing economic stability with development, creating an environment conducive to sustained progress in the real estate sector.”
Saransh Trehan, Managing Director, Trehan Group: “The RBI decision to maintain the status quo on repo rates is significant for ensuring affordable home loan rates, which are crucial for driving real estate investments. The move will support ongoing momentum in residential demand, particularly in high-growth areas like the NCR. By stabilizing mortgage rates, this policy encourages homebuyers and sustains sectoral growth. It also supports broader economic objectives such as inflation control and achieving GDP growth targets, making it a pivotal step in strengthening market confidence.”
Aman Gupta, Director, RPS Group: “We can see how consistently responsive and focused the RBI’s rather persistent approach in maintaining the repo rate has been for the real estate ecosystem. With home loan rates expected to be constant, I believe that there is now more positive confidence and expectation in the market. Our research shows that constant rates have already assisted in increasing housing inquiries by a significant 12% in the current quarter. The importance of stability cannot be overstated; home loans in segments such as mid segment housing will significantly determine how purchase decisions are made among consumers.”
Sandeep Mangla, Managing Director, Forteasia Realty Pvt Ltd: “Today’s decision to leave the repo rate unchanged clearly indicates the RBI’s intention to foster balanced growth. This, however, has a beneficial effect on developers as it ensures fixed borrowing costs which then leads to improved project execution. The decline in the unsold stock has decreased steadily by 18% on a yearly basis so far as markets are settling. This type of rate stability is precisely what the sector requires in order to sustain its rate of growth.”
Anurag Goel, Director, Goel Ganga Developments: “The consistent repo rate offers a favorable opportunity for homebuyers.This has been so due to the stabilization of current home loan rates that stand approximately at 8.5-9%, making EMIs bearable by an average buyer. Research conducted indicates that the general stabilisation of rates has upped the possible pool of individuals willing to purchase homes by about 15 percent in tier-2 cities. It is important for the country to maintain this policy as it will encourage the development of real estate space in the country.”
Ashish Agarwal, Co-Founder, Enzyme Office Spaces: “The sustained repo rates indicate the RBI’s nuanced understanding of the unique characteristics and sensitivities of the real estate sector. As construction costs have stabilized and interest rates have remained relatively constant, developers are now able to focus on executing projects rather than seeking financial restructuring. Recent statistics reveal a notable enhancement in project completion timelines, with delivery rates increasing by 22% compared to the previous year.”
LC Mittal, Director, Motia Builders Group: “The significance of real estate in contributing approximately 7 percent to India’s GDP underscores the necessity for stable rates, which in turn fosters growth in related industries. Our research indicates that a consistent financing cost has resulted in a 25% increase in the number of new project launches across major metropolitan areas. This ripple effect positively impacts a wide range of materials, including steel, cement, furniture, and home-related goods.”
Abbhinav R Jain, Co-founder and Chief Financial Officer, AdCounty Media: “Recent initiatives implemented by the RBI demonstrate a positive correlation between innovation capacity and economic progress. The newly-announced committee on ethics in artificial intelligence, led by Governor Das, is essential to ensure that the MSME sector utilizes technology in an ethical manner for commercial purposes. The reduction of CRR by 50 basis points enhances liquidity in a dual manner, facilitating small businesses’ access to investments in AI and automation while alleviating their working capital challenges. This alignment of technological regulation with liquidity management reflects the RBI’s long-term strategy for India’s economy. The integration of AI is set to revolutionize financial risk management and customer service across various banking operations; in this context, improved liquidity conditions will foster the adoption of these evolving technologies by MSMEs. Furthermore, the anticipated repo rates, in conjunction with these proactive measures, create an environment where technological advancement and business growth can thrive independently. This strategy may enable India’s MSME sector to effectively leverage technology without the burden of substantial capital investments.”