As the central bank lowers interest rates after five years, experts question whether the benefits will truly reach consumers and businesses.
In a move anticipated by financial markets, the Reserve Bank of India (RBI) slashed the repo rate by 25 basis points to 6.25%, marking the first rate cut in five years. While the decision has been welcomed across sectors, questions remain on whether banks will swiftly pass on the benefits to borrowers, how this move will impact liquidity, and if it signals a deeper rate-cut cycle ahead.
Industry leaders from real estate, banking, investment, and corporate lending have reacted with a mix of optimism and caution.
Homebuyers Get a Breather, but Will Banks Lower EMIs Quickly?
With rising interest rates weighing on homebuyers, the rate cut is expected to revive housing demand and improve affordability. However, real estate leaders caution that banks must ensure faster rate transmission to make a tangible difference.
“The RBI’s repo rate reduction to 6.25% marks a pivotal moment for India’s real estate sector, opening up new avenues for growth,” said Ashish Kukreja, CEO of Homesfy & mymagnet.io. “This cut provides much-needed relief to homebuyers with lower EMIs, offering stability and increased confidence in real estate investments.”
Prashant Sharma, President, NAREDCO Maharashtra, added: “This rate cut will boost affordability and housing demand, but banks must ensure quick transmission for the benefits to reach homebuyers.”
Shraddha Kedia-Agarwal, Director, Transcon Developers, emphasized the impact on affordability: “This will encourage more buyers, particularly in the affordable and mid-income housing segments. We also expect a reduction in construction financing costs, helping developers keep prices in check.”
Luxury housing markets could also see a boost. Vikas Sutaria, Founder, Irah Lifespace, noted: “With lower EMIs, we expect increased demand in aspirational markets like Alibaug and Lonavala, particularly in the luxury and second-home segments.”
Nishant Deshmukh, Founder & Managing Partner, Sugee Group:
“The RBI’s repo rate cut after a prolonged pause is a much-needed breather for the real estate sector, particularly in the premium and mid-segment housing categories. The reduced interest rates will lower borrowing costs for homebuyers, thereby increasing demand. While this is a positive development, we urge financial institutions to expedite the transmission of this rate cut to ensure that the benefits reach the end-users seamlessly. The real estate market has been witnessing strong momentum, and this policy move will provide an added boost to the sector’s growth trajectory.”
Samyak Jain, Director, Siddha Group:
“The real estate sector has been anticipating a rate cut, and this announcement by RBI is a step in the right direction. Lowering the repo rate makes home loans more attractive for buyers, especially first-time homebuyers who rely on financing. The impact of this move will be felt across all housing segments, with increased affordability and improved liquidity in the market. We expect this to accelerate decision-making for prospective buyers and further fuel the demand for housing.”
Govind Krishnan Muthukumar, Managing Director & Co-Founder, Tridhaatu Realty:
“This rate cut is a relief for homebuyers and developers who have been navigating a high-interest rate environment. The impact of a lower repo rate will not only be seen in reduced home loan EMIs but also in enhanced consumer sentiment, encouraging more people to invest in real estate. Additionally, for developers, this could translate into lower project financing costs, which will help manage input costs effectively. We expect banks to pass on the benefits quickly to maximize the impact of this positive policy move.”
Abhishek Jain, COO, Satellite Developers Private Limited (SDPL):
“The repo rate cut by 25 basis points is a welcome move that will benefit both homebuyers and developers. Reduced lending rates will encourage fence-sitters to take the plunge into homeownership, thereby increasing demand. At the same time, developers will gain from better financing terms, which will help in maintaining healthy cash flows and timely project execution. We anticipate this rate cut will have a cascading effect on the sector, leading to sustained momentum in residential sales.”
Rohan Khatau, Director, CCI Projects:
“The RBI’s 25 bps rate cut is a welcome move, arriving at a pivotal moment when homebuyer confidence is on the rise and real estate investments are gaining momentum. By easing home loan EMIs, this decision will enhance affordability and encourage more aspiring homeowners to take the plunge. However, for the full benefit to reach consumers, we urge banks to expedite the transmission of rate cuts, as past hikes have not always been fully passed on. A stable and accommodative monetary policy will be key to sustaining this positive trajectory in the real estate sector.”
Stock Market Sees Short-Term Gains, but Investors Remain Cautious
The initial stock market reaction was positive, with gains in banking, real estate, and auto stocks. However, financial experts caution that liquidity concerns could dampen long-term optimism.
“Rate cuts usually favor equity markets, but liquidity remains a concern,” said Mahendra Kumar Jajoo, CIO, Fixed Income, Mirae Asset Investment Managers. “Bond yields are expected to ease, but global economic conditions will play a crucial role.”
Dhawal Dalal, President & CIO-Fixed Income, Edelweiss MF, added: “We expect markets to focus on global developments, particularly currency moves. Bond yields should remain range-bound, with every uptick offering a buying opportunity.”
Business Lending: A Mixed Bag as Liquidity Remains Tight
For businesses, the rate cut reduces borrowing costs, but some experts warn that liquidity concerns and geopolitical risks could limit the overall impact.
Kishore Lodha, CFO, UGRO Capital, pointed out:
“The much-awaited rate cut eases interest rate pressure on the industry and provides relief to borrowers. However, liquidity has turned negative, which remains a cause for concern. The RBI is monitoring the situation closely, but inflation trends and geopolitical risks will determine future rate cuts.”
Kuldeep Jain, Founder & CEO, Build Capital, believes this could improve early-stage real estate funding: “The rate cut will ease financing costs for developers and homebuyers, improving liquidity and supporting new projects.”
The Road Ahead: Will RBI Cut Rates Further?
While today’s decision marks a shift in monetary policy, experts are divided on whether more rate cuts will follow.
Ranen Banerjee, Partner & Leader, Economic Advisory, PwC India, noted:
“This move provides monetary policy support to the economy, and combined with tax relief from the budget, it should boost demand. However, the RBI has kept its stance neutral, signaling that future cuts will depend on inflation and fiscal conditions.”
Lakshmi Iyer, CEO-Investment & Strategy, Kotak Alternate Asset Managers, added:
“No change in stance implies a more shallow rate-cut cycle, keeping all options open. Bond yields are likely to remain stable, with every uptick offering a buying opportunity.”
The real test will be how quickly banks adjust lending rates, whether consumer spending picks up, and if India’s economy sees sustained growth following this long-awaited shift in policy.
Economic Outlook: A Boost for Growth?
According to Ranen Banerjee, Partner and Leader, Economic Advisory, PwC India, “This rate cut, combined with fiscal stimulus from the Union Budget, should support consumption growth and push India’s GDP toward the upper end of the projected 6.3-6.8% range.”
