The front loading of the rate cut action plus CRR cut indicates focus is on enhancing the transmission of monetary policy
MUMBAI,June 7 (The CONNECT)- In a move that is likely to bring cheer to homebuyers, the Reserve Bank of India (RBI) has announced a 50 basis point cut in the repo rate, bringing it down to 5.50 per cent. This marks the third consecutive rate cut under Governor Sanjay Malhotra, signalling continued efforts to stimulate economic growth amid global headwinds. While the monetary policy stance has now shifted from ‘accommodative’ to ‘neutral’, the reduction in borrowing costs is expected to support housing demand and improve credit flow to the real estate sector, particularly at a time when affordability and buyer sentiment remain crucial for sustained momentum.
Industry leaders have welcomed the RBI’s decision, highlighting its potential to enhance affordability, uplift buyer confidence, and support long-term growth in the housing sector.
Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank: The higher-than-expected repo rate cut comes along with a shift in the stance back to neutral. This clearly points towards future decisions being more data dependant given the significant global uncertainties. Furthermore, the sharp drop in CRR is likely to keep liquidity conditions suitably comfortable to ensure monetary transmission.
Dharmendra Raichura- VP & Head of Finance at Ashar Group: The RBI’s anticipated 50 bps repo rate cut, bringing it down from 6% to 5.5 %, is a positive development for the real estate sector. For homebuyers, it translates to lower home loan interest rates, making homeownership more affordable and accessible. This is especially encouraging for first-time buyers and those looking to upgrade. For developers, improved buyer sentiment is likely to boost demand, allowing them to offer more attractive financing options and launch new projects with greater confidence. Overall, the rate cut sets the stage for a more vibrant market, benefiting both homebuyers and developers alike.
Sunny Bijlani, Joint Managing Director – Supreme Universal: The RBI’s decision to cut the repo rate by 50 basis points to 5.5% in June 2025 offers timely support for homebuyers navigating a high-cost housing market. With borrowing rates expected to ease, the reduction brings much-needed relief for those looking to invest or upgrade, making EMIs more affordable and long-term ownership more attainable. For aspiring homeowners, especially in the premium segment, it opens doors to spacious, thoughtfully designed residences. On the developer side, it creates momentum to enhance offerings through superior quality, timely delivery, and lifestyle-focused amenities. This move boosts buyer confidence and reinforces the industry’s commitment to delivering future-ready homes that meet evolving urban aspirations.
Manju Yagnik, Vice Chairperson of Nahar Group and Senior VP, NAREDCO, Maharashtra: The RBI’s decision to reduce the repo rate by 50 basis points is a strong and timely intervention, especially amid early signs of demand moderation in the residential sector. It also indicates the central bank’s confidence in macroeconomic stability and pursuit of growth. Lowering the repo rate to 5.5% will have a cascading effect across the lending ecosystem, bringing home loan interest rates well below 7.75%—a highly encouraging development for both existing and prospective homebuyers.
This rate cut is poised to create a significant improvement in affordability, especially for first-time purchase, this will help revive interest in mid-income and premium housing segments. For developers, available cheaper credit will ease liquidity constraints, accelerate project implementation, and improve delivery timelines. This will, in turn, provide much need cash flow to absorb the unsold inventory while generating fresh buyer interest that is good for the real estate value chain as a whole, thus enabling the growth of this sector and the broader economic revival by dint of its linkages with more than 200 allied industries.
Dharmendra Raichura- VP & Head of Finance at Ashar Group: The RBI’s anticipated 50 bps repo rate cut, bringing it down from 6% to 5.5 %, is a positive development for the real estate sector. For homebuyers, it translates to lower home loan interest rates, making homeownership more affordable and accessible. This is especially encouraging for first-time buyers and those looking to upgrade. For developers, improved buyer sentiment is likely to boost demand, allowing them to offer more attractive financing options and launch new projects with greater confidence. Overall, the rate cut sets the stage for a more vibrant market, benefiting both homebuyers and developers alike.
Sunny Bijlani, Joint Managing Director – Supreme Universal:The RBI’s decision to cut the repo rate by 50 basis points to 5.5% in June 2025 offers timely support for homebuyers navigating a high-cost housing market. With borrowing rates expected to ease, the reduction brings much-needed relief for those looking to invest or upgrade, making EMIs more affordable and long-term ownership more attainable. For aspiring homeowners, especially in the premium segment, it opens doors to spacious, thoughtfully designed residences. On the developer side, it creates momentum to enhance offerings through superior quality, timely delivery, and lifestyle-focused amenities. This move boosts buyer confidence and reinforces the industry’s commitment to delivering future-ready homes that meet evolving urban aspirations.
Vimal Nadar, National Director & Head, Research, Colliers India:The RBI has reduced the repo rate further by a strong 50 bps – bringing it down to 5.5%, the lowest in almost three years. The third consecutive reduction in benchmark lending rate coupled with shifting to neutral stance reaffirms the growth-supportive monetary policy aided by softening of inflation levels. Despite external volatilities and evolving trade scenarios, the Central Bank projects the domestic economy to grow at 6.5% in Fiscal 2025-26. For the real estate sector, this move is a strong tailwind: it lowers borrowing costs for buyers & developers, boosts homebuyer confidence, and enhances affordability, especially in the affordable and mid-income housing segments. This could lead to improved buyer sentiment, an increase in residential property enquiries and conversions, and a pickup in sales volumes across key urban markets. Over the medium term, the reduction in the cost of capital is also expected to enhance investor confidence, potentially boosting activity in both residential and commercial real estate segments.
Amit Prakash Singh, CBO Urban Money & Co-Founder Square Yards:The RBI’s decision to cut the repo rate by 50 basis points was on the expected lines and marks a proactive step toward stimulating economic growth. This substantial reduction is expected to ease borrowing costs significantly, reduce EMIs, and increase disposable income — all of which are likely to support domestic consumption and drive demand across sectors. With inflation well within the RBI’s comfort range, the move reinforces the central bank’s focus on growth and is poised to have a meaningful impact on the credit landscape, encouraging both consumer and business lending. It signals a timely and growth-oriented policy stance in the face of a moderating economic outlook.
Prashant Sharma, President, NAREDCO Maharashtra: The RBI’s decision to implement a third consecutive rate cut and revise its stance to ‘neutral’ reflects a proactive approach to support economic momentum amidst global uncertainties. A 50 bps reduction in the repo rate will help in bringing down home loan interest rates further, which is a welcome move for homebuyers and the real estate industry. Lower inflation expectations and a stable GDP outlook will give confidence to developers and investors alike. We believe this move will play a crucial role in reviving housing demand and sustaining growth in the sector.”
Nishant Deshmukh, Founder and Managing Partner, Sugee Group: We are pleased with the RBI’s decision to cut the repo rate by 50 basis points, marking a hat-trick of rate reductions in 2025. This move is both timely and well-calibrated, especially in light of ongoing global economic headwinds. Lower interest rates, along with the revised inflation outlook, offer significant support to real estate buyers — particularly in metropolitan cities like Mumbai, where financial accessibility greatly influences decision-making. The RBI’s continued ‘neutral’ stance signals its commitment to maintaining flexibility in supporting macroeconomic stability, which is a reassuring indicator for long-term investors.”
Samyak Jain, Director, Siddha Group: The RBI’s bold move to cut the repo rate by 50 bps while shifting the policy stance to ‘neutral’ comes as a booster shot for sectors like real estate that are sensitive to interest rate movements. This will significantly improve consumer sentiment and reduce the cost of borrowing, thereby accelerating housing demand, especially in mid-income and affordable segments. We appreciate the RBI’s continued efforts to balance inflation control with the need to maintain economic momentum amidst global uncertainties.”
Shraddha Kedia-Agarwal, Director, Transcon Developers: The RBI’s third straight rate cut, along with a shift to a ‘neutral’ stance, reflects its agility in navigating the evolving global and domestic macroeconomic landscape. With the repo rate now at 5.50%, we foresee an uptick in home buying activity driven by improved affordability. The revision in inflation projections to 3.7% is also encouraging and gives confidence in the RBI’s forward-looking policy framework. Such measures are crucial in reinforcing consumer trust and sustaining growth in India’s housing market, particularly in cities like Mumbai.”
Shrinivas Rao, FRICS, CEO, Vestian said: As expected, RBI lowered the repo rate amid global growth slowdown to boost domestic consumption. This is the third rate cut since the start of the year, as headline inflation has softened and is below the target range of 4%. Since February 2025, the RBI has cut the repo rate by 100 basis points (currently standing at 5.5%) with no headroom left for further rate cuts. Hence, the central bank has changed its stance from ‘Accommodative’ to ‘Neutral’ to carefully observe the global scenario and act accordingly. Major commercial banks are expected to pass on this benefit to homebuyers and developers by lowering interest rates, stimulating real estate demand and investments.”
Parijat Agrawal, Head of Fixed Income at Union Asset Management Company Private Limited: The Monetary Policy Committee’s (MPC) meeting actions were forward-looking and took the markets by surprise. The MPC reduced the repo rate by 50 basis points, changing the stance from accommodative to neutral, and the Cash Reserve Ratio (CRR) rate was decreased by 100 basis points. The downward revision of the inflation forecast is expected to provide reassurance. We expect growth to be supported with the ongoing rate transmission. Any additional rate cuts from here on appear unlikely in the near term and would be data dependent”
Ashwani Dhanawat, Executive Director & Chief Investment Officer, Shriram General Insurance Limited:The significant 50 basis points cut in the repo rate, shows RBI’s focus to spur economic growth. This is the third consecutive rate cut by the central bank in 2025. The committee has signaled a recalibrated approach by shifting its policy stance from ‘Accommodative’ to ‘Neutral’, amid evolving economic dynamics.
Also, another major move to enhance liquidity in the banking systems and stimulate credit growth is a cut in CRR by 100 bps, from 4% to 3%. These decisions come at a time when retail inflation is at 3.16% is lowest since July 2019 and gives the central bank room to support economic momentum.
The increased liquidity and push for economic growth could also stimulate demand for insurance products as businesses expand and consumers have more disposable income.”
Amit Goyal, Managing Director, India Sotheby’s International Realty: The third consecutive rate cut by the RBI, amounting to a cumulative reduction of 100 basis points, is expected to have a meaningful impact on the borrowing landscape. This is particularly beneficial for big-ticket borrowers, especially those availing home loans. A 1% reduction in interest rates can lead to a noticeable drop in monthly EMIs, easing the financial burden for existing borrowers. For new borrowers, the lower interest rate not only improves affordability but also enhances their loan eligibility, enabling them to access higher loan amounts without increasing their monthly outgo. This move is likely to keep the strong housing demand momentum strong , especially in the mid and premium segments.
Kalyan Chakrabarti, CEO, Emaar India: We welcome the RBI’s decision to reduce the repo rate by 50 basis points, bringing it down to 5.5%. This policy shift will support both homebuyers and developers, enabling a better environment for ongoing project execution through improved capital access. Additionally, the CRR cut and asset reforms will further enhance liquidity access, fostering robust growth in the real estate industry. The reduced home loan rates will also be beneficial for first-time home buyers, resulting in stronger demand for affordable housing.”
DK Srivastava, Chief Policy Advisor, EY India:“India’s GDP growth has performed admirably well in the post-COVID years. It has averaged 7.8% over the period 2022-23 to 2024-25. This is in spite of a challenging global economic environment where global GDP growth has been limited to 3.5%. Over this period, the contribution of net exports to India’s GDP growth has been 0.2% points, (-)2.8% points, and 2.3% points, respectively. Clearly, India’s growth has been largely driven by domestic demand. Within domestic demand, it is mainly the government’s capital expenditure which has been driving India’s growth. A more balanced profile of growth drivers would call for a tangible pickup in private investment demand and external demand. While much can not be said about the way external demand might evolve, domestic private investment demand can be stimulated. In this context, monetary policy is of considerable importance since it affects cost of capital.
The RBI, in its monetary policy review held on 06 June 2025, lowered the policy rate by 50 basis points to 5.5% with the objective of supporting growth. It projected real GDP growth at 6.5% in 2025-26 driven by private consumption and fixed capital formation. The RBI, however, changed its policy stance to neutral from accommodative. The frontloading of policy rate reduction is welcome. However, given the likely global growth slowdown and trade related uncertainties, the RBI may carry forward the momentum of the present interest rate reduction cycle at least until the policy rate reaches 5%. Conditions are ripe for maintaining this downward thrust since CPI inflation remains below the RBI’s target of 4%. In fact, the RBI has revised downwards its CPI inflation forecast for 2025-26 to 3.7% from 4.0% projected in April 2025. As private investment keeps improving, the ongoing rate reduction cycle could incentivize private investment and take India’s potential growth closer to 7% in the next few years.”
Gaura Sengupta – Chief Economist at IDFC FIRST Bank: The front loading of the rate cut action plus crr cut indicates focus is on enhancing the transmission of monetary policy . The neutral stance indicates that the bar for further rate cut is higher but isn’t completely off the table . In the next few policies we expect rbi to remain on pause.
The crr cut which will infuse liquidity in h2fy26 , will ensure system liquidity remains above the 1%of ndtl till March 2026. The need for further omo purchases is much lower now.
