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RBI holds repo rate at 5.5%; Home loan EMIs stay steady, supporting buyer sentiment during the festive season
RBI holds rates after a 100-bps cut this year, supporting festive homebuying, while some experts say a further cut with GST could boost affordable housing
The Reserve Bank of India on October 1 kept its policy interest rate unchanged at 5.5% for the second consecutive time, citing concerns over tariff uncertainties. RBI's decision to keep the repo rate unchanged maintains home loan EMIs at current levels, which helps sustain buyer sentiment. This stability means existing home loan borrowers won't see any immediate EMI changes, while new borrowers will find loan interest rates holding steady, say real estate experts.
Predictable borrowing costs will help real estate developers plan capital-intensive projects and drive investment across real estate and infrastructure, they said.
Some experts say the RBI Monetary Policy Committee’s decision to hold the repo rate reflects a cautious approach amid the festive season and volatile global economic conditions. However, it offers little relief for housing affordability. They noted that a rate cut alongside GST reforms could have given a significant boost to the residential market, especially the affordable and mid-income segments, which showed early signs of slowing after a strong first half of 2025.
Announcing the fourth bi-monthly monetary policy of the current fiscal, RBI Governor Sanjay Malhotra said the Monetary Policy Committee (MPC) unanimously decided to keep the short-term lending rate or repo rate unchanged at 5.5% with a neutral stance. Since February 2025, the RBI has reduced the policy rate by 100 basis points. In its previous policy review in June, it had trimmed the repo rate by 50 basis points to 5.5 per cent.
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,” said Anuj Puri, chairman, ANAROCK Group.
Praveen Sharma, CEO, REA India (Housing.com) said that the RBI’s decision to hold the repo rate steady at 5.5% ensures continuity in the current borrowing environment. This stability comes as a positive for homebuyers, especially during the festive season when purchase intent is at its peak.
“The Reserve Bank’s decision to hold the repo rate is a sign of confidence, not hesitation. There was undoubtedly a strong case for a rate cut; inflation expectations are low, actual inflation is well within the comfort zone, and high-frequency data signals potential headwinds for the strong growth we've seen. Combined with global trade and geopolitical uncertainty, the scope for monetary easing was evident,” said Samantak Das, chief economist and head – Research and REIS, India, JLL.
Also Read: Gold coins, white goods or price cuts? What homebuyers should watch out for this festive season
The potent combination of a rate cut on top of the recent GST reforms would have provided a significant boost to the residential market, especially the affordable and mid segments, which, after a strong run, began to show early signs of growth moderation in the second quarter of 2025, he said.
Having said that the committee is looking beyond immediate impact, focusing on allowing two more powerful, foundational drivers to take full effect: the complete transmission of the previous 100 bps rate cut and the game-changing impact of the recent GST rationalization on construction materials, he said.
Rate cut to ensure stable and balance growth for the real estate sector
Pradeep Aggarwal, founder and chairman, Signature Global (India) Ltd welcomed the RBI’s decision to maintain the repo rate. 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. 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.-
“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,” said Jash Panchamia, Executive Director, Jaypee Infratech Limited.
Real estate developers hope for a rate cut in the next MPC meeting
“The decision to keep the repo rate at 5.5% alongside the projected real GDP growth of 6.8% is welcome. However, just as the government has boosted various sectors by cutting GST, a reduction in the repo rate is needed to energise the real estate sector. We urge the RBI to consider bringing the repo rate below 5.5% in the next MPC meeting," said G. Hari Babu, National President, NAREDCO.
Lower interest rates will strengthen homebuyers’ confidence, increase housing demand, and particularly benefit the affordable housing segment. Supporting industries linked to real estate such as cement, steel, electricals, piping, and interiors will also see growth. A cut in repo rate will reduce EMIs on housing loans, enhance the purchasing capacity of middle-class families, and give further momentum to government missions like ‘Housing for All, he said.
Shishir Baijal, chairman and managing director, India hoped that future MPC decisions will consider accommodative measures to keep home loans affordable and boost consumer confidence in the housing market.”
Anshuman Magazine, chairman and CEO - India, South-East Asia, Middle East & Africa, CBRE, said the RBI MPC's decision to hold the repo rate reflects a measured approach ahead of the festive season, and amidst volatile global macroeconomic and policy conditions. Along with the recent GST cuts and range-bound inflation, the announcement is likely to lift consumer sentiment and may encourage greater demand across key sectors in the coming weeks.
