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The RBI has cut the repo rate by 25 basis points to 5.25%, aiming to support growth amid record-low retail inflation, which fell to 0.25% in October. Borrowing is expected to become cheaper across housing, auto and commercial segments. GDP grew 8.2% in Q2, prompting the RBI to lift its full-year growth forecast to 7.3% despite the rupee weakening past 90 against the USD. Industry experts welcomed the move, citing benefits for affordability, sales momentum and developer funding. They noted that lower EMIs and improved sentiment should boost mid-income and premium housing demand. Overall, the cut reinforces a favourable environment for real estate investment and expansion.
The Reserve Bank of India (RBI) has lowered the repo rate by 25 basis points to 5.25 per cent to support economic growth. The Central Bank's Monetary Policy Committee, led by Governor Sanjay Malhotra, made the decision unanimously, maintaining a neutral stance. The move follows record-low retail inflation, with India's CPI falling to 0.25 per cent in October, the lowest since the series began. Advertisement
The reduction is expected to ease borrowing costs across sectors, making housing, auto, and commercial loans more affordable. India's GDP grew 8.2 per cent in the second quarter, the highest in six quarters. Earlier this year, the RBI had cut rates in February and April by 25 basis points each, followed by a 50 basis point reduction in June. Retail inflation has stayed below the 4 per cent target since February, driven by easing food prices and favorable base effects.
Despite rupee weakness, recently crossing 90 against the USD, the RBI raised its GDP forecast for the year to 7.3 per cent, reflecting strong domestic demand.
Experts welcomed the move for its impact on housing and investment. Mr. Ritu Kant Ojha, Dubai-based strategist, said, "With today's 25 bps cut following June's reduction, the RBI has confirmed a sustained low-interest regime. A cumulative 75 bps easing in six months acts as a massive tailwind for domestic real estate volume. However, the data presents a paradox for the investor: while liquidity is easing, the Rupee breaching 90.43 signals that the 'silent tax' of currency depreciation is active. This divergence between local asset prices and global purchasing power demands a shift in strategy. It is no longer about choosing one market over another. The sophisticated play is now 'Geographic Arbitrage': utilize cheaper domestic borrowing for capital appreciation in India, while anchoring liquid capital in Dollar-pegged markets like Dubai. In this macroeconomic climate, a balanced portfolio borrows where the rates are falling and generates yield where the currency is hard."
Mr. Prashant Sharma, President, NAREDCO Maharashtra, added, "The RBI's decision to reduce the repo rate by 25 basis points comes at a perfect time for the industry and reinforces India's Goldilocks moment of low inflation and strong growth. A lower interest rate regime will provide much-needed momentum to housing demand, especially in the mid-income and premium categories where sentiment has remained strong. With inflation stabilising and GDP growth accelerating, this policy move will not only improve homebuyer affordability but also support developers by reducing overall borrowing costs. We expect the rate cut to trigger improved sales velocity across key markets in Maharashtra."
Other experts, including Mr. Kaushal Agarwal, Mr. Ankur Jalan, Mr. Vijay Harsh Jha, Rajat Bokolia, Mr. Samir Jasuja, Mr. Shilpin Tater, Ms. Shraddha Kedia-Agarwal, and Mr. Aditya Kushwaha, highlighted similar benefits, citing lower EMIs, improved affordability, accelerated homebuyer decisions, and stronger investment inflows into both residential and commercial real estate.
Overall, the rate cut, combined with low inflation and strong GDP, is expected to stimulate demand, support developers, and reinforce confidence across the real estate ecosystem.
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