RBI Retains Repo Rate At 5.5%; Here's Why It Is Important

They say when it rains, it pours and the Reserve Bank of India (RBI) has been ensuring a steady shower of benefits for home seekers all through 2025. Recently, the central bank took the decision to maintain the repo rate at 5.5% during its August monetary policy review, which again indicates stability for home buyers funding their purchase with a home loan. Real estate association heads are looking forward to another rate cut going forward, which would ideally facilitate home seekers during the festive season that lies ahead.

Prudent stance

Niranjan Hiranandani, Chairman, NAREDCO, explained, "After delivering a cumulative 100 bps rate reduction earlier this year, the Reserve Bank of India's decision to maintain the repo rate at 5.5% reflects a prudent and stable monetary stance, beneficial for the economy and the real estate sector. Stability in interest rates offers clarity for both developers and homebuyers, enabling structured planning and decision-making. A pause in further rate cuts also allows banks to ensure the complete transmission of the previous 100 bps reduction, a critical step in providing tangible relief to end consumers. This full transmission will enhance home loan affordability, supporting sustained housing demand.

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High optimism

While the stable monetary approach reinforces confidence, a marginal rate cut at this juncture could have further reduced borrowing costs, adding fresh momentum to residential sales amidst strong buyer and investor sentiment. Such a move could have amplified the sector’s contribution to economic recovery. Amid ongoing uncertainties in global trade and financial markets, the RBI’s cautious yet optimistic outlook signals confidence in India’s resilience to navigate external pressures. This decision not only underlines the robustness of India’s economic foundation but also strengthens its image as a steady and mature economy. Optimism in the market remains high as the real estate sector continues its growth trajectory."

Balanced approach

Prashant Sharma, President, NAREDCO Maharashtra, opined, “The RBI’s decision to maintain the repo rate at 5.5% despite easing inflation reflects a cautious yet balanced approach to managing global headwinds and domestic stability. For the real estate sector, a status quo on rates ensures continued momentum in home buyer sentiment and sustains the affordability factor in housing. However, given the moderating inflation and macroeconomic uncertainties, the industry looks forward to a calibrated rate cut in upcoming reviews to further support growth, especially in the affordable and mid-income housing segments.”

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Future expectations

Vikas Jain, President, NAREDCO Maharashtra NextGen, shared, “While the RBI’s decision to maintain the repo rate ensures monetary stability, the sector was optimistic about a rate cut given the drop in inflation to 2.1%. Affordable housing and first-time home buyers remain extremely interest rate sensitive. A cut would have significantly pushed housing demand forward. Nevertheless, we hope the RBI remains open to easing rates in the upcoming cycles to spur broader economic and sectoral growth.”

Micro markets

Sachin Mirani, President, CREDAI MCHI Thane said, “While a rate cut would have provided a much-needed boost to the affordable and mid-range housing, the current market dynamics suggest that home buyers in Thane are driven more by long-term confidence than short-term rate fluctuations.”

The absence of a rate cut by RBI might result in some challenges for Thane’s residential real estate, which is among the fast-growth property hubs in the Indian real estate market. “However, the demand for homes is expected to remain steady, driven by factors beyond interest rates. RBI maintaining ’status quo’ on rates notwithstanding, it is this strategic approach and sensitivity to market trends which will ensure affordability for genuine buyers and keep the Thane real estate market buoyant,” he added.

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Festive season

“With the festive season around the corner, Thane’s real estate developers are focussed on sustaining market momentum by being customer centric,” said Faiyaz Virani, Hon. Secretary, CREDAI MCHI Thane. Stakeholders in Thane real estate mentioned offering of attractive deals and flexible payment plans by a segment of Thane real estate developers. “Being responsive to market conditions has been the hallmark of Thane property market,” he added.

All eyes are now on the next RBI announcement, with great expectations of another rate cut to make the festive season truly auspicious for home seekers.