RBI Cuts Repo Rate to 5.5%: Real Estate Sector Expects Growth in Housing Demand, Liquidity

In a strong move aimed at stimulating consumption and investment, the Reserve Bank of India’s Monetary Policy Committee (MPC) has reduced the benchmark repo rate by 50 basis points, bringing it down from 6% to 5.5%. The decision, announced by RBI Governor Sanjay Malhotra on June 6, marks the third consecutive rate cut since February 2025 and comes on the back of easing inflation, with retail inflation falling to 3.16% in April.

Governor Malhotra underscored the central bank’s growth focus, stating, “Indian economy growing at a very fast pace, we are making all efforts to grow even faster in our vision of Viksit Bharat.”

In addition to the repo rate cut, the RBI also reduced the Cash Reserve Ratio (CRR) by 100 basis points to 3%, unlocking additional liquidity for the banking system. The move signals a shift in policy stance from ‘accommodative’ to ‘neutral’, as the central bank seeks to balance growth with long-term price stability.

The cumulative rate reductions this year, totalling 100 basis points, have already lowered borrowing costs across the economy. Banks are expected to pass on the latest cut to consumers through reduced home loan rates and lower EMIs, providing much-needed affordability to homebuyers.

Developers and real estate industry leaders welcomed the decision, which they believe will support housing demand and improve credit availability.

Dharmendra Raichura, VP & Head of Finance at Ashar Group, said: “The RBI’s anticipated 50 bps repo rate cut, bringing it down from 6.00% to 5.5%, is a positive development for the real estate sector. For homebuyers, it translates to lower home loan interest rates, making homeownership more affordable and accessible. This is especially encouraging for first-time buyers and those looking to upgrade. For developers, improved buyer sentiment is likely to boost demand, allowing them to offer more attractive financing options and launch new projects with greater confidence. Overall, the rate cut sets the stage for a more vibrant market, benefiting both homebuyers and developers alike.”

The reduction is also expected to ease affordability concerns in high-cost housing markets. Sunny Bijlani, Joint Managing Director – Supreme Universal, noted: “The RBI’s decision to cut the repo rate by 50 basis points to 5.5% in June 2025 offers timely support for homebuyers navigating a high-cost housing market. With borrowing rates expected to ease, the reduction brings much-needed relief for those looking to invest or upgrade, making EMIs more affordable and long-term ownership more attainable. For aspiring homeowners, especially in the premium segment, it opens doors to spacious, thoughtfully designed residences. On the developer side, it creates momentum to enhance offerings through superior quality, timely delivery, and lifestyle-focused amenities. This move boosts buyer confidence and reinforces the industry’s commitment to delivering future-ready homes that meet evolving urban aspirations.”

The reduction in CRR is also likely to channel more liquidity toward housing finance. Ms. Manju Yagnik, Vice Chairperson of Nahar Group and Senior VP, NAREDCO, Maharashtra, stated: “The RBI’s decision to reduce the repo rate by 50 basis points is a strong and timely intervention, especially amid early signs of demand moderation in the residential sector. It also indicates the central bank's confidence in macroeconomic stability and pursuit of growth. Lowering the repo rate to 5.5% will have a cascading effect across the lending ecosystem, bringing home loan interest rates well below 7.75%—a highly encouraging development for both existing and prospective homebuyers.

This rate cut is poised to create a significant improvement in affordability, especially for first-time purchase. This will help revive interest in mid-income and premium housing segments. For developers, available cheaper credit will ease liquidity constraints, accelerate project implementation, and improve delivery timelines. This will, in turn, provide much needed cash flow to absorb the unsold inventory while generating fresh buyer interest that is good for the real estate value chain as a whole, thus enabling the growth of this sector and the broader economic revival by dint of its linkages with more than 200 allied industries.”

The twin measures of cutting both the repo rate and the CRR are expected to have a broad impact on housing demand. Mr. Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd., explained: “The twin reduction of the repo rate by 50 basis points to 5.50% and cash reserve ratio by 100 basis points to 3% respectively by the RBI provides significant relief for homebuyers across the country. This bold move by the apex bank comes at a crucial time when inflation is easing, and the economy requires strong stimulus to sustain growth. Lower borrowing costs will make home loans more affordable, thereby encouraging more buyers to enter the market. The reduction in CRR is expected to infuse significant liquidity in the banking system, which will prompt banks to lend even more.

The demand for mid and premium segment homes has already been on the rise following previous rate cuts, and this larger reduction will further accelerate interest from both homebuyers and investors. Additionally, the positive market sentiment around the possibility of further rate cuts this financial year bodes well for the real estate sector, paving the way for sustained growth and renewed confidence in the housing market.”

A similar positive sentiment was echoed by Mr. Ashok Kapur, Chairman, Krishna Group and Krisumi Corporation, who said: “The Reserve Bank of India’s decision to cut the repo rate by 50 basis points, along with a 100 basis points reduction in the Cash Reserve Ratio (CRR) to 3 percent, is a strong and timely measure to support the real estate sector and other industries. With today's policy changes, interest rates have now fallen by 100 basis points from last year's level.

We welcome this decision with open arms, as a reduced repo rate translates to lower borrowing costs, while the CRR cut will enhance liquidity in the banking system. Together, these steps will encourage homebuyers to make property investment decisions. Moving forward, this move will have a ripple effect on demand in the coming months across different segments of homes, ultimately contributing to sustained growth and increased confidence in the real estate market.”

With banks expected to respond with lending rate reductions, developers anticipate a quicker transmission of benefits to homebuyers. Mr. Jash Panchamia, Executive Director, Jaypee Infratech Limited, observed: “The RBI’s decision to slash the repo rate by 50 basis points and the CRR by 100 bps is clearly aimed at fueling consumption and accelerating investment, especially with inflation remaining within the central bank’s comfort zone. With today’s MPC outcome, the repo rate now stands at 5.50%, marking a cumulative reduction of 100 basis points over three sequential rate cuts. This move paves the way for commercial banks to lower their lending rates, making credit more affordable and further boosting demand for real estate.

With several scheduled commercial banks already offering home loans below 8 percent, today’s decision may lead to a broader transmission of lower rates across the lending ecosystem. This will not only ease the financial burden on borrowers but also enhance affordability across housing segments, offering significant relief to homebuyers and providing a timely push for those planning property purchases.”

Mortgage industry players believe the rate cuts are a clear positive for retail borrowers. Ms. Kanika Singh, Chief Risk Officer – IMGC, stated: “RBI has cut the repo rate by 50 bps to 5.50% given the continuing downward inflation trend, which is well below the 4% tolerance level. RepoRate is now at its lowest level in nearly 3 years. Furthermore, to support growth and stimulate the credit cycle in a challenging geopolitical and economic environment, the central bank could consider additional rate cuts during the year.

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 50 bps rate cut, the home loan EMIs will come down substantially, provided the transmission occurs in real-time and not with a lag. While global economic outlook continues to remain volatile due to trade policy uncertainty, India’s growth projections remain positive, supported by strong domestic fundamentals aided by the government and, to some extent, private capex. The inflation outlook is also positive, supported by low core inflation and the expectation of a good harvest.”

On the developer side, the latest policy decision is seen as an enabler of stronger project execution and improved cash flow. Mr. Aman Sarin, Director & Chief Executive Officer, Anant Raj Limited, commented: “The RBI’s decision to cut the repo rate by 50 basis points—the third cut this calendar year, following two earlier cuts of 25 basis points each—reflects a clear push towards supporting credit growth and economic activity. For both existing and new borrowers, this cumulative 100 basis point reduction will provide significant relief in terms of reduced interest burden. Additionally, the move is expected to inject more liquidity into the system, further stimulating economic momentum. We believe this will have a positive impact on the real estate sector, particularly the mid- and high-end segments, as interest rates become more affordable, reduced EMI and loan eligibility improves.”

The impact is not limited to primary housing markets. Mr. Sunil Sisodiya, Chairman and CEO of Neworld Developers, noted: “The RBI’s decision to reduce the repo rate by 50 basis points is a timely boost for developers launching projects in high-demand, lifestyle-driven markets such as Goa. Lower interest rates not only ease the cost of capital for construction and expansion but also positively influence end-user demand, especially for holiday residences, which are often discretionary purchases. In Goa, where we’re seeing rising interest from metro-based investors and NRIs, the improved affordability on home loans can help convert interest into actual bookings. This rate cut gives developers greater confidence to invest in quality, design-forward projects that align with the aspirations of today’s buyers.”

Commercial and industrial real estate segments also stand to benefit. Mr. Siraj Saiyed, Director, Arete Group, explained: “Commercial and industrial real estate will benefit from the RBI's 50 basis point rate cut and CRR reduction, which indicate a firm push for expansion and liquidity infusion. Project viability will be increased, and capital deployment across asset classes will be accelerated, by reduced borrowing costs and better credit availability. This policy change will further improve investor sentiment and occupier demand in Gujarat, where the development of industrial corridors and the expansion of logistics are already gaining momentum. This is a chance to expedite the development of infrastructure that will satisfy the changing demands of manufacturing and warehousing while yielding robust, risk-adjusted returns.”

Summing up the sector’s expectations, Vishal Raheja, Founder & Managing Director of InvestoXpert.com, said: “The Reserve Bank of India’s decision to cut the repo rate by 50 basis points to 5.5% is a timely and positive step that will significantly benefit the real estate sector. At a time when the industry is striving to regain momentum post-pandemic and amid global economic uncertainties, this move is expected to improve overall market sentiment. Lower borrowing costs will ease the financial burden on developers, enabling faster project execution and improved cash flow.

More importantly, it will make home loans more affordable, encouraging fence-sitters to take purchase decisions and thereby boosting housing demand, especially in the affordable and mid-income segments. We believe this reduction, coupled with supportive policies and ease of credit, can pave the way for a more robust and sustained recovery in the coming quarters.”

As the transmission of lower rates begins to take hold, the real estate sector is poised for an upswing, with developers, lenders, and homebuyers all anticipating a more favourable environment for housing demand and project delivery in the months ahead.