RBI rate cut to reduce home loan interest rates and boost housing demand: Industry bodies

Real estate sector CREDAI and NAREDCO on Friday said the RBI’s move to cut the repo rate by 25 basis points would lead to a reduction in home loan rates and boost housing demand.The central bank cut its key interest rate for the first time in six months and took steps to boost liquidity, supporting a “Goldilocks” economy despite high U.S. rates.

“This move will further strengthen positive market sentiment, reduce financing costs, support credit growth and boost demand across sectors including real estate,” said CREDAI Chairman Shekhar Patel.With this interest rate cut, he said, the RBI wants to stimulate India’s economic growth at a time when inflation is at its lowest level in a decade.

“As liquidity is no longer a key focus for the central bank, CREDAI expects a strong end to the financial year and continued momentum in housing demand across segments,” Patel said.

NAREDCO President Parveen Jain described the reduction in repo rate as an important step towards reviving momentum for the economy and real estate sector.

“This reduction will improve liquidity and encourage new investments in various sectors. For real estate, lower interest rates make home loans more affordable, supporting homebuyers and strengthening demand,” he said.

Home sales have surged over the past three calendar years (2022-2024) due to pent-up demand, following a massive slowdown in 2020 and 2021 due to the COVID pandemic. The luxury residential segment led this sales growth.

However, residential sales in terms of volume have declined in the first nine months of the current calendar year due to a higher base effect and a sharp increase in prices after the pandemic.

Experts believe that high economic growth in the first two quarters of the 2025-2026 fiscal year and lower mortgage rates could boost housing demand in the coming months.