RBI's Repo Rate Pause & GST Cuts: Implications for Homebuyers

RBI's decision to keep the repo rate unchanged at 5.5% maintains home loan EMIs at current levels, which helps sustain buyer sentiment but does not improve housing affordability.

This stability means existing home loan borrowers won't see any immediate EMI changes, while new borrowers will find loan interest rates holding steady. As per latest ANAROCK data, Q3 2025 residential sales in India's top 7 cities dropped 9% year-on-year to 97,080 units, yet overall sales value jumped 14% to INR 1.52 lakh crore, indicating demand shifted towards premium and mid-segment homes.

However, the recent GST rate cuts provide significant relief. With GST on cement reduced from 28% to 18%, construction costs are expected to fall by 3-5%, potentially reducing home prices by 1-1.5% for buyers. This reduction could save homebuyers INR 1-3 lakh on purchases, particularly benefiting affordable and mid-segment housing where cost sensitivity is high. ANAROCK data shows that affordable housing's share has declined from 38% in 2019 to just 18% in 2024, making these GST cuts crucial for reversing this trend. The combination of stable interest rates and lower construction costs creates a favourable environment for housing demand, especially during the ongoing festive season.

Aniruddha Mehta, Chairman & Managing Director, Umiya Buildcon, “The RBI’s decision to keep the repo rate unchanged reflects a balanced approach, providing stability at a time when the real estate sector is witnessing strong demand. A predictable interest rate environment is crucial for both homebuyers and developers, enabling better planning and fostering confidence in long-term investments.

We continue to see robust interest in residential properties, particularly in mid-income and premium segments, as well as growing activity in commercial spaces. With the festive season around the corner, this policy consistency creates the right conditions for sustained market momentum.

Looking ahead, the focus should be on supporting affordability and creating frameworks that encourage responsible growth. A stable rate environment, coupled with such measures, will ensure that India’s real estate sector continues its trajectory of healthy, sustainable development.”

Pradeep Aggarwal, Founder & Chairman, Signature Global (India): “We welcome the RBI’s decision to maintain the repo rate at 5.50%, as it brings stability and continuity to India’s financial ecosystem amid global uncertainties. The move is expected to sustain positive momentum across sectors, including real estate, by supporting liquidity, boosting consumer confidence, and encouraging investment activity. With the festive quarter beginning on a strong note and GST reforms further lifting sentiment, the housing sector is likely to continue witnessing steady demand across segments. Traditionally marked by heightened consumer activity, this period creates a favourable environment for property purchases and further strengthens market optimism. Looking ahead, the status quo is set to ensure a stable and balanced growth trajectory for the real estate ecosystem, benefiting developers, buyers, and allied sectors alike”

Jash Panchamia, Executive Director, Jaypee Infratech: “The RBI’s decision to keep the repo rate unchanged reflects a steady and supportive approach to maintaining economic stability, with inflation under control. Following earlier reductions, the current stance provides stability to the housing market, allowing homebuyers and long-term investors to plan confidently. The positive sentiment from the festive season, combined with the transmission of previous rate cuts, is helping maintain strong buyer interest.”

Also Read: Will a Repo Rate Cut Spark a Festive Season Real Estate Boom

For developers, consistent interest rates allow for careful planning and execution of projects. Coupled with attractive offerings and well-designed homes, demand remains robust across segments. This stable policy environment is expected to sustain market momentum, support ongoing project launches, and reinforce confidence in long-term growth, ensuring the housing sector continues to thrive and remains appealing to prospective buyers.