Repo Rate Cut Expected to Boost Housing Demand

New Delhi, Jun 5 (PTI) Realtors' apex bodies CREDAI and Naredco expect at least 25 basis points reduction in repo rate by the RBI on Friday and said it will help a lot in increasing demand for residential properties.

The RBI's rate-setting panel started its three-day brainstorming on monetary policy on Wednesday, and Governor Sanjay Malhotra will announce the decision on the key benchmark lending rate on Friday morning.

"We are expecting 50 basis point reduction in repo rate. This will boost housing demand to a great extent," CREDAI National President Shekhar Patel told PTI.

He said there should be at least 25 basis points cut.

"Housing demand in the last three months has been a bit slow. So, the rate cut will help immensely in improving the sales," Patel said.

The RBI reduced the key interest rate (repo) by 25 bps each in February and April, bringing it to 6 per cent.

Naredco's National President G Hari Babu said the real estate sector always keeps a close watch on the RBI's monetary policy, as it has a significant impact on housing demand - both directly and indirectly.

"In the current economic environment, where inflation is largely under control and macroeconomic indicators are showing stability, a reduction in the repo rate would be a timely and positive move. It would provide much-needed relief to both homebuyers and developers by lowering borrowing costs and easing liquidity," he said.

The Naredco President noted that real estate is a vital driver of the economy, with linkages to over 200 sectors from cement and steel to furniture and furnishings.

"Therefore, a cut in the repo rate will not only boost housing demand but also spur overall economic growth and generate large-scale employment," said Hari Babu.

According to an assessment by the RBI, in response to the 50-basis points cut in the repo rate since February 2025, most of the banks have reduced their repo-linked external benchmark-based lending rates (EBLRs) and marginal cost of funds-based lending rate (MCLR).

Housing loan outstanding has increased to Rs 30 lakh crore as on April 18, 2025, from Rs 27.41 lakh crore year-on-year, according to the latest RBI data.

On expectations from monetary policy, Sterling Developers CMD Ramani Sastri said the real estate sector is hopeful for a further rate cut as it would be highly encouraging for homebuyers and developers alike.

Dhruv Agarwala, Group CEO of Housing.com, said there is a strong case for 25 basis points rate cut.

"...For the housing sector, lower home loan rates would enhance affordability and sustain demand- particularly critical at a time when we are witnessing early signs of demand tapering and developers pulling back from the affordable housing segment due to rising input costs," Agarwala said.

Bengaluru-based realty firm Sanjeevini Group Chairman and Founder, Umesh Gowda H A said home loan interest rates have dropped below 8 per cent in some banks, which is a good sign of timely transmission of two repo rate cuts by the RBI.

"We expect another 25 bps cut in repo rate and hope that more banks quickly pass on the benefit to borrowers," he said.

This will provide a much-needed relief to not just existing homebuyers in the form of reduced EMI but also those who have been postponing their decision to buy a home, Gowda said.

Ashok Kapur, Chairman of Krishna Group and Krisumi Corporation, said, "The RBI had adopted an accommodative stance in its previous policy review meeting, and it is expected that we will again see a cut, giving further relief to the various sectors of the economy."

Garvit Tiwari, Director & Co-Founder of InfraMantra, said a cut in interest rate will give a spur to housing demand and encourage new entrants to make real estate purchases.

Realty firm Sikka Group MD Harvinder Sikka expects a rate cut to boost consumer sentiment.