Loans to Get Cheaper as RBI Cuts Repo Rate to 5.25% Amid Low Inflation, Robust GDP Growth

Mumbai, December 5, 2025: It’s going to be a warm December as the Reserve Bank of India announced a 25 basis points cut in the repo rate, reducing it from 5.5 per cent to 5.25 per cent. Sidelining concerns about the depreciating rupee, RBI Governor Sanjay Malhotra made the announcement that followed a unanimous decision of the central bank’s Monetary Policy Committee (MPC). The MPC meet, a bimonthly affair, last three days as it looked at record low inflation in the backdrop of a falling rupee that has hit its lowest ever.

In June, the RBI had earlier reduced its key lending rate from 6 per cent to 5.5 per cent. The repo rate cut is expected to mean cheaper housing and vehicle loans for retail borrowers.

The RBI also said that it expects retail inflation to be lower than its earlier projection, with Consumer Price Index (CPI) inflation projected at 2 per cent for FY 26. Inflation is projected at 3.9 per cent for the first quarter of FY 26, lower than the bank’s previous estimate of 4.5 per cent. The RBI has also upped its GDP forecast for the current financial year to 7.3 per cent from its earlier estimate of 6.8 per cent.

The MPC has also adjusted the Standing Deposit Facility (SDF) to 5 per cent and Marginal Standing Facility (MSF) to 5.5 per cent. The RBI will now conduct forex swaps and buy bonds worth INR 1 lakh crore via open market in the hope that monetary transmission would be helped and sufficient liquidity made available.

Here’s how the movers and shakers of the real estate industry reacted.

Parveen Jain, President, NAREDCO: “A 25-basis-point cut in the repo rate is an important step toward giving fresh momentum to the economy and the real estate sector. The RBI’s efforts in recent months to bring inflation under control and maintain price stability are commendable. This reduction will improve liquidity and encourage new investment across several sectors. For real estate, lower interest rates make home loans more affordable, which supports homebuyers and strengthens demand. The positive impact will extend to allied industries as well, helping generate more employment. In Tier II and III cities, this move can further boost interest among both developers and buyers. Overall, the cut provides additional support to the broader economic recovery.”

Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE: “The RBI decision to slash the repo rate by 25 basis points amid a low inflationary environment and better-than-expected GDP growth, reflects its focus on improving the consumption in the economy. This is likely to push the banks to transmit previous rate cuts more aggressively and shift towards a more growth-supportive stance. For real estate, this is expected to boost the demand and strengthen investment sentiment across segments. For home loan borrowers, this might bring a tangible relief as floating-rate EMIs will ease. We expect the market momentum to accelerate further in the coming weeks and hope for greater demand in mid and affordable segments.”

Mohit Goel, Managing Director of Omaxe Ltd: “The RBI’s decision to reduce the repo rate is a timely signal that the larger economic cycle is shifting toward growth, and it comes at a particularly important moment for the mid-segment where affordability plays a defining role. A reduction in borrowing costs immediately improves a family’s ability to plan a purchase, and for developers, it creates the right environment to advance launches and maintain construction momentum. The mid-income category has been the backbone of residential demand through 2024 and 2025, and this policy move strengthens that foundation further. A lower cost of credit has the power to unlock the next wave of housing momentum. With 2025 shaping up as a year of steady demand, improved supply pipelines, and clearer policy direction, this rate cut adds to the confidence that the real estate market is entering a more balanced, expansionary phase that can sustain itself well into the future.”

Sudeep Bhatt, Director Strategy, Whiteland Corporation: “The RBI MPC has decided to reduce the repo rates at 5.25% and slashing it by 25 bps, as it meets for the last time this year. The stance is significant for the real estate sector. Reduced repo rate means more affordable home loans which directly boost housing demand, while improving liquidity for developers. The sector stands to benefit from the re-established buyer sentiment and a growth in investment appetite with EMIs set to fall and borrowing cost easing. The approach will improve clearance of unsold inventory and streamline project launches, with real estate being a primary driver in India’s economic growth.”

Dr. Gautam Kanodia, Founder, KREEVA and Kanodia Group: “The RBI’s move to cut repo rate by 25 bps and bring it to 5.25 per cent is in line with the sector’s expectations. The decision comes as a timely move aimed at stabilizing the economy in the coming year. This significant cut is expected to directly benefit thereal estate sector by lowering home loan interest rates, thereby making homeownership more accessible. For developers, it paves the way for expanding their presence in the high-potential growth markets of NCR. On the whole, the decision is in favor of both.”

Sakshee Katiyal, Chairperson, Home & Soul: “The RBI’s 25 bps rate cut arrives at a crucial time for the overall real estate sector. Softer interest rates tend to lift confidence across the board—homebuyers, investors, and even commercial occupiers. This reduction will support faster decision-making in residential purchases while also improving sentiment in office, retail, and mixed-use developments. As financial conditions ease, we expect a broader pickup in activity, with the rate cut reinforcing market stability and encouraging a more sustained growth cycle for the real estate sector as a whole.”

Prateek Tiwari, MD, Prateek Group: “A rate cut by 25 bps after two stable policy runs reflects the central bank’s comfort with inflation trends and overall macro resilience. This is a huge relief for homebuyers in Noida-Greater Noida, where demand for premium and luxury housing has been soaring. The reduction to 5.25 per cent can meaningfully lower EMIs, making the year-end quarter more active. By 2026, this will help maintain housing supply momentum while supporting healthier, end-user-driven growth across the region.”

Salil Kumar, Director – Marketing and Business Management, CRC Group: “The reduction in the repo rate is a timely and encouraging step for the real estate sector. As developers, we see this move giving homebuyers much-needed confidence, especially young families and first-time purchasers who closely watch interest rate trends. With EMIs expected to ease, we foresee a clear rise in serious enquiries and a more steady improvement in overall sales momentum. This decision will support market stability and motivate more buyers to move forward in their homeownership journey.”

Bhupindra Singh, COO, RISE Infraventures: “A 25-bps rate cut might appear incremental, but its timing, after two policy pauses, sends a powerful message to investors across both residential and commercial segments. For premium homebuyers, it encourages stability and high-value purchases. For commercial investors, it lowers financing costs and improves viability for Grade A developments and high-street retail. The sector is already seeing renewed interest from NRIs and domestic investors seeking diversified portfolios across NCR. This policy shift will strengthen year-end activity and support a robust, opportunity-rich 2026 across asset classes.”

Sanjay Sharma, Director, SKA Group: “The RBI’s decision to reduce the repo rate by 25 basis points and maintain a neutral stance is a highly encouraging move for the real estate sector. The cut comes at a strategically crucial time when homebuyer confidence is already strong, and this will further improve affordability—particularly in markets like Noida–Greater Noida and Ghaziabad, where rising aspirations are accelerating the shift towards luxury and premiu housing. With liquidity-enhancing steps such as the ₹1 lakh crore OMO purchase and the USD/INR swap, we expect borrowing conditions to ease gradually from December onward. This decision is likely to bring fence-sitters into active buying mode, helping developers witness a much stronger Q4 and setting the tone for an upbeat start to 2026.”

Manik Malik, CEO, BPTP: “The announcement for the RBI MPC December meet has arrived with the committee meeting for the last time this year. It has decided a 25-bps reduction with the repo rate being at 5.25 per cent. It is a positive news for homebuyers, making it a lenient approach on the part of the committee. The approach will give way to affordable EMIs and housing loans. For more economical options, homebuyers in this scenario can also opt for floating rate loans.”

Ashish Bhutani, CEO, Bhutani Group: “A cut in the repo rate is a powerful growth catalyst for real estate. Lower interest rates directly enhance affordability, stimulat end-user demand, and unlock fresh investment across segments. This move will significantly boost market sentiment and accelerate the sector’s growth trajectory.”

Ravi Prakash Pandey, Founder and Chairman, Amravati Group: “Lower interest rates breathe fresh life into housing demand: more buyers, stronger confidence, and a renewed wave of growth for developers and communities alike.”

Kunal Seth, Director, Shalimar Corp: “With borrowing costs falling, homeownership just got more accessible — this rate cut unlocks new opportunities for families to invest in their future and helps the real estate sector flourish.”

Suresh Garg, CMD, Nirala World: “Lower interest rates will greatly benefit homebuyers as affordability will directly increase. People will now be able to make purchase decisions without delay, which will have a direct impact on project sales and new launches. This move will prove beneficial not only for buyers but for the entire real estate ecosystem.”

Shrinivas Rao, FRICS, CEO, Vestian: “A 25 bps rate cut signals a clear intent of monetary policy to support growth while inflation stays restrained. With borrowing costs declining, we expect project construction to accelerate and consumer demand to pick up significantly. For commercial real estate, lower funding costs and improved leasing activity are likely to fast-track occupier expansion and support new developments. This also brings better clarity for long-term investments and encourages broader credit expansion. Capital-intensive sectors and housing will particularly benefit from improved affordability. Such a calibrated step strengthens economic stability and supports the ongoing growth momentum.”

Lt. Col. Ashwini Nagpal (Retd.), CIO – Diligent Builders: “The RBI’s decision will lead to a reduction in interest rates, creating a positive sentiment in the market and giving new direction to all types of industries. In the real estate sector, the pace of under-construction projects will accelerate, and end-users’ confidence in term loans will increase.”

Dinesh Gupta, President, CREDAI, Western UP: “The 25 basis point reduction in the repo rate is a highly positive step for the real estate sector. It will lower home loan EMIs and make housing more affordable for common buyers. We are confident that the coming quarters will witness a significant rise in bookings and sales. This decision will infuse new energy and confidence across the market.”

Piyush Bothra, Co-Founder & CFO, Square Yards: “The 25-basis point cut in the repo rate is a bold and welcome move in the current global macro environment. Despite the sliding rupee and other headwinds, this cut is a very strong signal by the RBI about the strength of the Indian economy and its decoupling from the rest of the world macro. This cut offers a meaningful boost to the real estate sector, reinforcing affordability at a time when buyer activity is already strengthening. With inflation well-managed, growth projections improving, and reforms sustaining consumption, the rate reduction builds positively on the earlier easing undertaken this year. Lower home loan rates, especially during the festive season, are expected to accelerate demand across mid-income and first-time buyer segments. For developers, the cut enhances credit conditions and lifts sentiment across the market.”

Pankaj Kumar Jain, Director, KW Group: The RBI’s 25-basis-point repo rate reduction is a timely and balanced move that will ease funding costs and support end-user home demand, especially in the mid-income segment Lower interest rates translate into improved affordability for homebuyers and a more conducive environment for new project investments, which will further strengthen the real estate growth story in across India.”

Dinesh Jain, CMD, Exotica Housing: “The rate cut is a major relief for families who had been delaying their home-buying decisions due to EMI pressures. Lower interest rates will significantly improve affordability and restore buyer confidence, encouraging people to purchase homes without hesitation. This move will not only boost residential sales but also strengthen project deliveries, bringing stability and growth to the real estate sector.”

Shailendra Sharma, Chairman – Renox Group: “The RBI’s decision to cut the repo rate has brought a great opportunity for the market. The demand in the real estate sector, which was already strong, will now grow even faster. This reduction will encourage buyers in both the mid-segment and luxury categories.”

Vimal Nadar, National Director & Head Research at Colliers India: “After a brief pause, RBI has reduced the repo rate further by 25 basis points to 5.25 per cent , the lowest in over three years. This reduction in benchmark lending rates, coupled with the continuation of neutral stance, reflects the confidence in India’s economic resilience despite global uncertainties and a depreciating Rupee. GDP growth rate projection for FY 2025-26 has been revised upwards from 6.8 to 7.3 per cent, supported by robust domestic demand & private consumption. Meanwhile consumer inflation is expected to remain benign at 2% during the ongoing fiscal year.

“For the real estate sector, especially the residential segment, this rate cut builds on the momentum created during the recent festive season and GST rationalization of key construction materials. Lower borrowing costs will further improve affordability and buyer sentiment, particularly in affordable & mid-income housing segments. Additionally, steady growth in average income levels can potentially drive property enquiries and boost housing sales in the next few quarters.”

Amit Goyal, Managing Director, India Sotheby’s International Realty: “The RBI’s 25-basis-point repo cut comes at the right time. Real estate is capital intensive, and after years of elevated construction costs, lower rates offer meaningful relief. Cheaper credit boosts confidence—from homebuyers to institutional investors and should drive demand, transactions, and price stability. With India posting 8.2 percent growth in Q2, the rate cut is a strong sail forward, reinforcing liquidity and sentiment in an already resilient economy.”

Himanshu Garg, Director, RG Group: “We view the reduction in the repo rate as a very positive development for the industry. It will boost demand in both residential and investment segments, as lower EMIs enhance purchasing capacity. This move will be especially beneficial for first-time homebuyers. We are confident that this decision will increase market activity and further strengthen the pace of the economy.”

Avneesh Sood, Director, Eros Group: “The RBI’s 25 bps repo rate cut comes at an important time for the economy and the real estate sector. With inflation now at very low levels and growth staying strong, the policy environment finally offers room to support demand without risking stability. For real estate, this move is both timely and meaningful. A lower repo rate reduces banks’ cost of funds, which should translate into more attractive home loan rates, crucial when end-user demand is healthy but sensitive to borrowing costs. Developers, especially in the mid-income and affordable segments, will also benefit from better liquidity and faster credit flow. The RBI’s plan to inject durable liquidity through OMOs and FX swaps further strengthens confidence by ensuring smoother access to capital for ongoing and upcoming projects. If banks pass on the cut quickly, this step can boost housing demand, support new launches, and further accelerate the sector’s formalisation and growth as we head into 2026.”

Gaurav Sobti, Founder Homegram: “The reduction in interest rates will have a significant impact on digital real estate platforms as well, as buyers will now move forward with greater confidence. The benefit of lower EMIs will help people make quicker decisions, leading to a substantial rise in sales. We expect residential demand to reach record levels in the next six months. This move will positively influence both investor confidence and the overall momentum of the industry.”

Ramji Subramaniam, Managing Director at Sowparnika Projects: A 25-basis-point reduction in the repo rate will give fresh impetus to India’s housing market. As home loan rates are expected to fall further, borrowing will likely become affordable for prospective homebuyers. Lower borrowing costs, coupled with recent GST reforms, will create a favourable environment for both buyers and developers. We anticipate renewed demand across mid-segment and aspirational housing, supporting the long-term stability and growth of the sector.