The Reserve Bank of India’s latest 25-basis-point reduction in the repo rate to 5.25% has set the stage for a more accommodative monetary environment heading into 2026. This marks the lowest repo rate in over three years, completing a cumulative 125 bps easing in 2025. With inflation trending soft, GDP projections revised upwards, and demand indicators holding strong, analysts said the central bank’s move reinforces confidence across India’s real estate ecosystem.
The impact is broad, affecting depositors, homebuyers, developers, AIFs, and institutional investors, with industry leaders noting that sentiment is turning decisively positive.
AIFs & Investor Behaviour: Shift Toward Higher-Yield Real Estate Instruments
Affluent investors are increasingly looking beyond traditional fixed-income products as deposit rates are expected to fall. Experts noted that lower borrowing costs improve project viability, enhancing opportunities for Category II real estate-focused AIFs.
Mr. Ankur Jalan, CEO, Golden Growth Fund (GGF), a category II Real Estate focused Alternative Investment Fund (AIF), said, “From depositors’ standpoint, a 25bps cut in repo rate will create concerns about declining returns on fixed deposits and other interest-bearing savings. Furthermore, this would likely push banks to trim deposit rates in the coming months, making it harder for savers to earn meaningful returns. While lower rates may support broader economic growth, affluent investors and family offices often redirect capital toward higher-return products such as real estate–focused Category II AIFs to preserve real yields, thereby improving fundraising momentum for these funds. A lower interest-rate environment also reduces the cost of capital for developers and strengthens project viability, which in turn expands the opportunity for AIFs.”
Housing Market: A Cushion for Buyers and Developers
After months of elevated property prices and mixed demand, the rate cut is expected to provide relief to buyers and boost developer confidence. Experts said this step will encourage new purchases and faster project execution.
Mr. Vijay Harsh Jha, Founder and CEO of property brokerage firm VS Realtors, said, “The housing market has shown signs of a slowdown. A 25-bps rate cut and its proper transmission would provide homebuyers cushion from rising property prices thereby encouraging home purchases. Developers, too, stand to benefit from lower cost of borrowing enabling faster project execution. The housing demand-supply dynamics seem to be aligning since second half of 2024 and this pursuit of symmetry, in what developers are launching and what buyers want, will help propel real estate market.”
Personal Finance: Lower EMIs and Smarter FD Strategies
Borrowers benefit from lower EMIs, but fixed-income investors may face lower returns. Experts recommend strategies such as FD laddering and diversifying across products to maintain yields and flexibility.
Mr. Shashank Gupta, Director, RPS Group, said, “The Reserve Bank of India (RBI) has cut the repo rate again, which means that in the long term, fixed deposit (FD) investors will have to accept that their once attractive returns are going to be lower. Instead of panic, this is the right time to think in a strategic way. One of the best means is FD laddering: dividing the investments into different tenures so that not all the deposits will be locked at the current lower rates, and there will always be some maturities ready to take the rates if the cycle changes. Senior citizens can choose a combination of bank FDs, high-rated corporate FDs, and small savings schemes for safety with slightly higher yields instead of depending on just one product. On the other hand, Rs 1,850 will be the drop in monthly home loan EMI for a Rs 35 lakh loan over 20 years, which is a support for the borrowers.”
Mr. Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara Pvt. Ltd., said, “The cut in the repo rate by the RBI once more signifies the end of very appealing fixed deposit returns for FD investors, at least for a while. Don't panic; instead, this is the right moment to act wisely. For example, you can consider FD laddering as a practical measure: divide your money among various periods so that not all the deposits grow at today's lower rates, and at the same time, there are some maturities which are always coming up to get the better rates if the cycle turns. This way, senior citizens can also opt for a combination of bank FDs, a few corporate FDs, and small savings schemes to get a blend of safety and slightly higher yields rather than sticking to a single product.”
Macro & Policy Outlook: Strong Momentum and Sector Confidence
Mr Shrinivas Rao, FRICS, CEO, Vestian, said, “A 25 bps rate cut signals a clear intent of monetary policy to support growth while inflation stays restrained. With borrowing costs declining, we expect project construction to accelerate and consumer demand to pick up significantly. For commercial real estate, lower funding costs and improved leasing activity are likely to fast-track occupier expansion and support new developments. This also brings better clarity for long-term investments and encourages broader credit expansion. Capital-intensive sectors and housing will particularly benefit from improved affordability. Such a calibrated step strengthens economic stability and supports the ongoing growth momentum.”
Mr Piyush Bothra, Co-Founder & CFO, Square Yards, said:, “The 25-basis point cut in the repo rate is a bold and welcome move in the current global macro environment. Despite the sliding rupee and other headwinds, this cut is a very strong signal by the RBI about the strength of the Indian economy and its decoupling from the rest of the world macro. This cut offers a meaningful boost to the real estate sector, reinforcing affordability at a time when buyer activity is already strengthening. With inflation well-managed, growth projections improving, and reforms sustaining consumption, the rate reduction builds positively on the earlier easing undertaken this year. Lower home loan rates, especially during the festive season, are expected to accelerate demand across mid-income and first-time buyer segments. For developers, the cut enhances credit conditions and lifts sentiment across the market.”
Mr Vimal Nadar, National Director & Head, Research at Colliers India, said, “After a brief pause, RBI has reduced the repo rate further by 25 basis points to 5.25%, the lowest in over three years. This reduction in benchmark lending rates, coupled with the continuation of neutral stance, reflects the confidence in India’s economic resilience despite global uncertainties and a depreciating Rupee. GDP growth rate projection for FY 2025-26 has been revised upwards from 6.8% to 7.3%, supported by robust domestic demand & private consumption. Meanwhile consumer inflation is expected to remain benign at 2% during the ongoing fiscal year. For the real estate sector, especially the residential segment, this rate cut builds on the momentum created during the recent festive season and GST rationalization of key construction materials. Lower borrowing costs will further improve affordability and buyer sentiment, particularly in affordable & mid-income housing segments. Additionally, steady growth in average income levels can potentially drive property enquiries and boost housing sales in the next few quarters.”
Real Estate & Credit Markets: Improved Affordability and Investor Sentiment
Mr Amit Goyal, Managing Director, India Sotheby’s International Realty, said, “The RBI’s 25-basis-point repo cut comes at the right time. Real estate is capital intensive, and after years of elevated construction costs, lower rates offer meaningful relief. Cheaper credit boosts confidence—from homebuyers to institutional investors and should drive demand, transactions, and price stability. With India posting 8.2 percent growth in Q2, the rate cut is a strong sail forward, reinforcing liquidity and sentiment in an already resilient economy.”
Ms. Kanika Singh, Chief Risk Officer– IMGC, said, “The RBI’s decision to cut the repo rate by 25 bps to 5.25% while maintaining a neutral stance reflects its confidence in the current inflation trajectory, which remains well within the comfort zone. The rate cut will provide relief to borrowers, as lending rates and EMIs are likely to ease further, supporting household cash flows and consumption. Although real GDP growth in Q2FY26 surprised on the upside—supported by strong private consumption and industrial momentum—nominal GDP continues to lag, justifying a supportive monetary stance. With the repo rate reduction, Home Loan borrowers are definitely expected to benefit. We have already seen some return on investment (ROI) benefits from the previous two rate cuts being passed on to borrowers. With a 25 bps rate cut, the home loan EMIs will come down substantially, provided the transmission occurs in real-time and not with a lag. The inflation outlook is also positive, supported by low core inflation.”
Mr. Pramod Kumar Gupta, Director, Kadamashree Developers India LLP, said, “The repo rate of 5.25% which came after the series of cuts in 2025, significantly boosted the relative appeal of real estate as an investment class compared to fixed-income products. Investors are likely to see Grade A residential, commercial strata units and listed REITs as the new places for superior risk-adjusted returns and regular cash flows as safer instruments yields go lower. The increased FY26 GDP growth expectancy points to a long-lasting demand situation for the likes of office, retail and logistics that will in turn support rental growth and reduced vacancy rates midterm. The policy change is like rolling out the carpet for homebuyers and investors who think long-term as it indicates the start of a friendly interest rate cycle where getting in on quality assets during the rise could provide both capital appreciation and income.”
Impact on Homebuyers and Developers
Mr. Sandeep Agarwal, Executive Director - Finance & Group CFO, Elan Group, said, “The RBI’s 25 bps rate cut to 5.25%, along with its neutral stance, adds a constructive layer of stability to an already resilient economic environment. With inflation easing and growth indicators showing positive momentum, today’s policy direction reinforces confidence across long-term asset categories, including premium housing. In markets like NCR, where buyers prioritise well-designed, experience-led development, such policy cues help strengthen clarity and support investment decisions. As infrastructure continues to shape high-growth corridors, this balanced monetary approach is well placed to sustain momentum in the upper segments of real estate.”
Mr. Sidharth Chowdhry, Managing Director, Dalcore, said: “The Reserve Bank of India has sustained its current Repo Rate of 5.50%, serving as a major pillar of stability for real estate investment during these turbulent and changing economic environments. Homebuyers can create better budgeting and plan for their long-term financial future with the continued stability of home loan interest rates. Developers are also benefiting from this level of assurance, as it allows them to forecast sales more accurately and produce projects in a timelier manner. At Dalcore, we see the continued stability in Interest Rates as reinvigorating confidence within the Real Estate Value Chain. This in turn increases the motivation to invest and expand. With increasing numbers of property purchasers desiring secure and progressive residential housing options, a stable policy environment is needed for sustaining the momentum in the Residential Sector and for contributing to the overall economic resilience and prosperity.”
Mr. Manik Malik, CEO, BPTP, said, “The announcement for the RBI MPC December meet has arrived with the committee meeting for the last time this year. It has decided a 25-bps reduction with the repo rate being at 5.25%. It is a positive news for homebuyers, making it a lenient approach on the part of the committee. The approach will give way to affordable EMIs and housing loans. For more economical options, homebuyers in this scenario can also opt for floating rate loans.”
Mr. Jitender Yadav, Director, Roots Developers, said, “The RBI’s decision of reducing repo rate at 5.25% by 25 bps, is a catalyst for renewed enthusiasm in the real estate sector. Lower borrowing costs will make home loans more affordable which will increase demand of home buyers. This will also help developers to speed up project launches and improve completion timelines, strengthening an environment of growth and confidence across key housing markets.”
Managing Lower FD Returns Through Smarter Allocation
Mr. Shashank Gupta, Director, RPS Group, notes, "The Reserve Bank of India (RBI) has cut the repo rate again, which means that in the long term, fixed deposit (FD) investors will have to accept that their once attractive returns are going to be lower. Instead of panic, this is the right time to think in a strategic way. One of the best means is FD laddering: dividing the investments into different tenures so that not all the deposits will be locked at the current lower rates, and there will always be some maturities ready to take the rates if the cycle changes. Senior citizens can choose a combination of bank FDs, high-rated corporate FDs, and small savings schemes for safety with slightly higher yields instead of depending on just one product. On the other hand, Rs 1,850 will be the drop in monthly home loan EMI for a Rs 35 lakh loan over 20 years, which is a support for the borrowers."
Mr. Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara Pvt. Ltd., says, "The cut in the repo rate by the RBI once more signifies the end of very appealing fixed deposit returns for FD investors, at least for a while. Don't panic; instead, this is the right moment to act wisely. For example, you can consider FD laddering as a practical measure: divide your money among various periods so that not all the deposits grow at today's lower rates, and at the same time, there are some maturities which are always coming up to get the better rates if the cycle turns. This way, senior citizens can also opt for a combination of bank FDs, a few corporate FDs, and small savings schemes to get a blend of safety and slightly higher yields rather than sticking to a single product."
A Turning Point for Real Estate Going Into 2026
It's not just a routine policy adjustment that is reflected in the RBI's latest 25-bps repo rate cut; rather, it is a defining pivot in India's monetary cycle that has far-ranging implications for the real estate market. After the sector has been going through a challenging period of high costs, tight liquidity, and lender caution for several quarters, it is now stepping into a significantly more supportive environment. Easier credit conditions will likely help to bring back dormant demand, to accelerate purchase decisions that have been deferred, and to increase affordability both in the middle-income and in the luxury segments of housing.
Lower financing costs, better project viability, and more predictable cash flows—i.e., the key factors that strengthen the sector’s supply pipeline—are the things that developers will gain, in turn. Furthermore, a more accommodative rate environment generally serves as an instrument of attraction for fresh domestic and global capital, thus helping India consolidate its position as one of the most resilient property markets in the world.
By combining the effects of GST 2.0 recalibration, firmer RERA implementation, and rising household incomes, the analysts are of the opinion that 2026 may become a landmark year when affordability, sentiment, and liquidity will finally be in harmony. The industry is entering a new cycle characterized by maturity, transparency, and long-term growth driven by factors such as improved consumer confidence, stable macroeconomic conditions, and a regulatory ecosystem that is more responsive.
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