Announcing the deliberations of the second Monetary Policy Committee (MPC) for the Financial Year 2025, the Reserve Bank of India (RBI) Governor said the committee kept the rate unchanged at 6.5%.
This move of keeping rate unchanged for the eighth consecutive time indicates that there will be no immediate relief for real estate or home loan installments.
Banks are unlikely to adjust their lending rates soon, meaning EMIs will stay the same for now.
Also Read: RBI MPC Meet 2024: Repo rate unchanged at 6.5%, GDP forecast raised to 7.2%
Repo rate and real estate demand
RBI’s repo rate plays a crucial role in determining home loan interest rates. Any changes in the interest rate fluctuations can impact real estate demand.
A lower interest rates generally boost the housing demand by making borrowing more affordable, which drives up the property prices.
However, higher interest rates may reduce demand and property prices to soften.
At the same time, stability in the repo rate indicate that the mortgage rates are likely to remain steady, offering predictability for your financial planning.
Also Read: RBI MPC’s key announcements: Bulk deposits limit to e-mandate framework
What experts say on RBI’s rate pause?
Dhruv Agarwala, Group CEO of Housing.com and PropTiger.com said, “RBI’s move ensures stability in interest rates for prospective homebuyers in the short term. Nevertheless, the potential necessity for a downward revision of the repo rate remains pivotal for fostering future sectoral growth, particularly amidst mounting concerns over escalating property prices impacting a significant portion of genuine homebuyers across India.
Chairman of ANAROCK Group, Anuj Puri, said, “With unchanged borrowing costs, both developers and homebuyers benefit from increased market confidence and predictability.”
“Buyers in mid-range and premium property are sensitive to volatile interest rates, and upward hikes would cause many of them to defer home purchases. This policy continuity supports sustained demand in these two segments,” he said.
Atul Monga, CEO and Co-Founder of Basic Home Loan said, “For prospective homebuyers, this is a favourable moment to assess their financial readiness and lock in current interest rates before any potential future hikes. However, buyers must consider their overall financial health, including job stability, existing debts, and emergency savings.”.
Ramani Sastri, Chairman & MD, Sterling Developers said, “A future repo rate cut would serve as a big boost to homebuyer sentiment and enable better affordability, which is an extremely sensitive factor in the housing market.”
On the Modi 3.0 coming into power, he said, “We also hope that the new government would continue to focus on infrastructure development, lowering home loan interest rates, prioritizing tax incentives, easing regulatory constraints and streamlining approval processes for overall growth of the real estate sector.”
