Home loan to become cheaper, encouraging fence-sitters to buy apartments: Builders on RBI policy

New Delhi, Dec 5 (PTI) Real estate developers expect a reduction in interest rates on home loans following the RBI decision to cut repo rate by 25 basis points, encouraging fence-sitters to buy residential properties, according to industry players.

The RBI on Friday cut key benchmark interest rate for the first time in six months and vowed to provide Rs 1 lakh crore liquidity boost to the banking sector to support a "goldilocks" economy in the face of high US tariffs.

Welcoming the RBI's policy, realtors' apex bodies CREDAI and NAREDCO said the move would result in lowering of borrowing cost and improving consumer sentiments.

CREDAI President Shekhar Patel said the RBI's decision will stimulate housing sales, while NAREDCO President Parveen Jain said this would help in creating more demand in the real estate as well as allied sectors.

Among developers, Sanjay Dutt, Managing Director and Chief Executive Officer of Tata Realty and Infrastructure Ltd, said, "This reduction will likely push home loan interest rates further below the 8 per cent mark, effectively increasing affordability and borrowing power for fence-sitters in the mid-income and premium segments." The rate cut would act as a catalyst that would convert customers' enquiries into closures, he added.

Venkatesh Gopalakrishnan, Director Group Promoter's Office and MD of Shapoorji Pallonji Real Estate, said this calibrated move supports growth, anchors inflation expectations, and strengthens market confidence.

"For the housing sector, especially mid-income and aspiring buyers, lower borrowing costs enhance affordability and uplift sentiment. With the benefits of rate cuts being passed on, it will significantly accelerate decision-making in the mid-income segment, while the premium category benefits more through an uplift in overall market confidence and improved investment sentiment," Gopalakrishnan added.

Housing sales surged in the last three calendar years (2022-24) on pent-up demand, following a huge slowdown during 2020 and 2021 due to the COVID pandemic. The luxury housing segment led this growth in sales.

However, the sales of residential properties in volume terms have fallen in the first nine months of the current calendar year due to a higher base effect and a sharp appreciation in prices post-pandemic.

Experts believe that high economic growth in the first two quarters of the 2025-26 fiscal and lower mortgage rates could boost housing demand in the coming months.

Reacting to the policy, BPTP CEO Manik Malik said that a supportive interest-rate environment has the potential to positively influence housing affordability and overall sentiment.

Ashok Kapur, Chairman of Krisumi Corporation, said the rate cut supports the long-term growth cycle of the real estate market.

"Softer lending rates will further enhance affordability for discerning buyers looking to upgrade and invest in high-quality homes that offer better design standards and long-term asset value," he said.

Ramani Sastri, Chairman & MD of Sterling Developers, said the rate cut would be highly encouraging for homebuyers and developers alike, potentially boosting affordability and investments in the sector.

Delhi-NCR-based Nirala World CMD Suresh Garg said, "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." Landmark Group Chairman Sandeep Chhillar said the move is expected to reignite demand, sustain buyer interest, and create a favourable environment for continued growth across the housing market.

The move will benefit both developers and homebuyers, said Pyush Lohia, Director of Lohia Worldspace.

According to Ankur Jalan, CEO of Golden Growth Fund, a lower interest-rate environment also reduces the cost of capital for developers and strengthens project viability, which in turn expands the opportunity for AIFs (alternative investment funds).

Sarvam Properties co-founder Manan Joshi said the lower interest costs will boost affordability, while Shraddha Kedia-Agarwal, Director of Transcon Developers, said this policy move will give homebuyers the comfort and confidence to upgrade and invest.

Vikas Garg, Joint MD of Ganga Realty, said lower EMIs will encourage quicker decisions from buyers.

"For developers, the softer rate environment brings relief on financing and working capital, supporting smoother construction progress and healthier cash flows," he said. PTI MJH MJH SHW