India’s central bank, the Reserve Bank of India (RBI), recently announced its second consecutive repo rate cut for 2025, bringing it down by 25 basis points to 6%. These twin reductions, combined with the RBI’s shift to an accommodative stance, are being lauded by industry leaders as a stabilizing and growth-oriented move amid global economic challenges. From enhanced affordability for homebuyers to reinvigorated investor interest, the ripple effects of these decisions are expected to positively impact India’s economy, real estate sector, and broader credit ecosystem.
Fueling Housing Demand and Developer Confidence
With average housing prices rising by approximately 50% post-Covid, experts believe that lowering borrowing costs will provide relief to home loan borrowers and encourage housing purchases. “Fence-sitters will be motivated to act as EMIs come down, while developers will benefit from reduced borrowing costs, enabling them to expand and launch new projects,” says Mr. Samir Jasuja, Founder & CEO of PropEquity.
Adding to this perspective, Mr. Umesh Gowda H.A., Chairman and Founder of Sanjeevini Group, highlights how rate transmission by banks will lower home loan rates, potentially dipping below 8% for most borrowers. “This will benefit both new and existing borrowers, sustaining domestic demand and contributing to India's economic growth,” he explains.
Real estate growth is expected to be further bolstered by the RBI’s proposal to securitize stressed assets through market-based mechanisms. Mr. Vimal Nadar, Head of Research at Colliers India, believes this will provide significant relief to cash-strapped developers, allowing stalled projects to resume and strengthening overall demand in the sector.
Accelerating Broader Economic Expansion
Industry stakeholders agree that the rate cut serves as a catalyst for India’s broader economic ecosystem. “For borrowers across segments, this means affordable access to capital and lower EMIs. Lenders benefit from enhanced liquidity and lower funding costs, allowing them to expand credit offerings and improve affordability,” says Mr. Amit Prakash Singh, Co-Founder & Chief Business Officer of Urban Money.
Mr. Shrinivas Rao, FRICS, CEO of Vestian, emphasizes the role of the repo rate cut in boosting GDP growth amid recession fears globally. “The reduction catalyzes domestic consumption and signals future rate cuts—key to reducing mortgage rates and boosting overall demand,” he explains.
The move also encourages high-net-worth individuals (HNI) and ultra-high-net-worth individuals (UHNI) to explore alternative investments. Mr. Ankur Jalan, CEO of Golden Growth Fund, predicts that declining fixed deposit rates will prompt affluent investors to seek high-return asset classes like real estate-focused Alternative Investment Funds (AIFs), which combine regulatory oversight with risk diversification.
Real Estate as a Cornerstone of Economic Stability
For India’s housing market, the twin repo rate cuts promise significant gains. “This decision bolsters corporate confidence and investments while maintaining momentum in housing demand,” says Mr. Amit Goyal, MD of India Sotheby’s International Realty. Lower financing costs are likely to boost liquidity, enabling developers to roll out new projects, particularly in affordable and mid-income housing segments.
As Mr. Piyush Bothra, Co-Founder and CFO of Square Yards, explains, “For end-users, affordable EMIs make homeownership more achievable at a time when property values are rising, reinforcing confidence across residential real estate.”
Conclusion: A Path Forward Amid Uncertainty
India’s twin repo rate cuts offer a welcome respite in a time of global economic headwinds. By reducing borrowing costs, easing liquidity, and fostering investment in housing and credit markets, the RBI’s move underscores its commitment to domestic stability and growth. While challenges remain, industry leaders are optimistic that these rate cuts will help India weather external uncertainties and unlock sustained, long-term economic momentum.
