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Bengaluru: Home loan interest rates are likely to come down with the Reserve Bank of India (RBI) deciding to cut the repo rate by 25 basis points to 5.25% on Friday.
“The RBI’s decision to cut the repo rate by 25 bps is a distinct positive for the Indian real estate sector as we close 2025. Coming on the back of earlier easing cycles this year, this move further sweetens the value proposition for homebuyers, particularly in the affordable and mid-income segments which are highly sensitive to interest rate fluctuations,” said Anuj Puri, Chairman, ANAROCK Group.
With average housing prices across the top 7 cities having risen by notable double-digits (approx. 10%) in 2025 as per ANAROCK Research, this rate cut provides a critical cushion to affordability, potentially bringing home loan interest rates to more attractive levels. This can encourage aspiring homebuyers who had paused their decisions due to price hikes to finally take the plunge. The rate cut is a distinct sentiment multiplier for year-end sales, he said.
However, the real impact hinges on the effective transmission of these benefits.
“If banks swiftly pass on this rate cut to borrowers, we anticipate a renewed surge in sales velocity carrying firmly into Q1 2026. The current trends indicate that luxury homes will continue to drive residential real estate in 2026, as well,” Puri said.
Demand for affordable and mid-segment homes remains strong in the country, but is hamstrung by high prices impacting affordability. This rate cut can potentially bring at least some fence-sitters to the market, he added.