India Inc hails repo rate cut, real estate firms see rise in housing demand

New Delhi: Welcoming the Monetary Policy Committee's (MPC) decision to cut repo rate, industry captains on Friday said that the move would provide relief to home loan borrowers, boost consumption, lift consumer sentiments and help the India story.

“The Reserve Bank of India’s (RBI) decision to reduce the repo rate by 25 basis points to 6.25%, along with the Finance Ministry’s recent move to lower the tax burden for the middle class, is expected to have a significant impact on the Indian economy," said Mahendra Patil, Founder and Managing Partner, MP Financial Advisory Services.

Amid easing inflation pressure, the Reserve Bank of India (RBI)'s monetary policy committee on Friday decided to cut policy repo rate by 0.25% to 6.25% raising hopes of relief in loan EMIs.

The RBI has cut the key interest rate in nearly five years.

"The Reserve Bank of India's decision to cut the repo rate by 25 basis points is a welcome move that will significantly boost economic growth and enhance market sentiment. This rate cut will lower borrowing costs, making it easier for businesses to access capital and invest in expansion projects. For the real estate sector, this reduction in interest rates is particularly beneficial as it will stimulate demand for housing and commercial properties," said Nitesh Kumar, MD & CEO Emami Realty.

The MPC chaired by RBI Governor Sanjay Malhotra in its February 5-7 meeting noted that inflation has declined.

"Supported by a favourable outlook on food and continuing transmission of past monetary policy actions, it is expected to further moderate in 2025-26, gradually aligning with the target," Malhotra said in his maiden policy statement.

The RBI has projected retail inflation for the current financial year at 4.8%. Assuming a normal monsoon, CPI inflation for the financial year 2025-26 is projected at 4.2%.

Commenting on MPC decision, Girish Kousgi, MD & CEO, PNB Housing Finance said, "The RBI’s decision to cut the repo rate by 25 basis points the first rate cut since 2020 is a significant move that will provide much-needed relief to home loan borrowers and give a strong boost to the housing sector. Lower interest rates directly enhance affordability, making home loans more accessible for aspiring homeowners and first-time buyers."

Shishir Baijal, Chairman and Managing Director, Knight Frank India said that lower borrowing costs are expected to boost demand for home loans, making housing more affordable and stimulating sector growth.

"This (repo rate cut) is a positive development for both homebuyers and developers, potentially leading to increased sales and new project launches. We hope interest rate cuts will be passed on to consumers and the home loan rates become more attractive which combined with the earlier announced tax incentives spur residential demand across the different price brackets, but especially in the below Rs 50 Lakh category, which has seen continued weakening of demand," he said.