The Reserve Bank of India’s (RBI) decision to keep the repo rate unchanged at 5.25% for a second consecutive policy review provides stability for homebuyers and real estate developers amid the ongoing crisis in West Asia and concerns over inflationary pressures. With borrowing costs remaining steady, homebuyers are likely to benefit from stable EMIs and improved affordability, helping sustain residential demand. The rate pause also provides developers with greater certainty for financial planning, cash-flow management and timely project delivery
While a weaker rupee and elevated energy prices could increase project costs due to imported materials and supply chain disruptions, the RBI’s policy continuity is expected to provide a supportive environment for the sector, experts said.
“The RBI’s decision to keep the repo rate unchanged at 5.25% is a positive development for both the economy and the real estate sector. At a time when global uncertainties continue to pose challenges, this move will help maintain market stability and reinforce consumer confidence,” said Parveen Jain, President, NAREDCO.
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“With borrowing costs remaining steady, homebuyers will not face any additional burden on home loan repayments, which should support housing demand, particularly in the mid-income and affordable housing segments. The decision also provides greater predictability for developers, enabling better financial planning and smoother execution of projects,” he said.
Shekhar Patel, president, CREDAI, said that with borrowing costs remaining steady, housing demand, particularly across mid-income and premium segments, is expected to remain resilient. At the same time, the policy reflects a balanced approach towards supporting growth while remaining watchful of inflationary risks. However, continued policy support will remain important to address the affordable housing demand-supply gap.
Homebuyers expected to benefit from affordability
For borrowers already servicing home loans, the RBI’s decision to maintain the status quo on policy rates comes as a significant relief, especially amid ongoing global uncertainties, geopolitical tensions, and concerns over rising crude oil prices.
“The decision means there will be no immediate increase in EMIs, helping households maintain financial stability and plan their expenses with greater confidence, explains Raoul Kapoor, Co-CEO, Andromeda Sales and Distribution Pvt. Ltd.
Aman Sarin, Director and CEO, Anant Raj Limited, said, this is a welcome move by the RBI, especially given the ongoing crisis in West Asia, which continues to put pressure on input costs across sectors. In such an environment, stable interest rates are important for maintaining overall market confidence. A steady rate scenario helps in better financial planning and provides clarity for both businesses and homebuyers. When borrowing costs are stable, it becomes easier to plan investments, manage cash flows, and stay focused on execution.
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“For many homebuyers, affordability today is not just about lower rates, but about certainty in monthly payments. That confidence plays a key role in converting intent into actual purchases. Overall, this decision creates a supportive environment where demand can continue to build gradually, while allowing the sector to navigate external challenges with greater resilience,” he said.
What’s in it for real estate developers?
The RBI’s Monetary Policy Committee (MPC) decision to keep the repo rate unchanged is a key anchor for the Indian residential real estate market.
“The sector is witnessing strong annual growth amid short-term geopolitical shocks, and this rate pause reflects rising consumer pressures and volatile construction environments,” said Anuj Puri, Chairman – ANAROCK Group.
“External vulnerabilities have tested the broader macroeconomic environment in early 2026. The ongoing war in the Middle East is having direct economic effects, including higher global oil prices and higher domestic construction costs. This sort of supply-side inflation is putting pressure on developers. Second, rising geopolitical uncertainty has led many potential Middle Eastern investors, who tend to invest large sums in Indian real estate, to pause their purchases. Constant borrowing costs mean that the market is not being punished by rising material costs and rising loan rates,” he said.
Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India, said that for the real estate sector, the decision will provide much-needed stability and predictability.
“Stable borrowing costs are particularly important for sustaining demand in the residential market, where affordability remains a key consideration. While a weaker rupee could lead to some increase in construction costs through imported materials and inputs, the continuation of a stable interest rate regime should help offset these pressures by supporting buyer confidence and investment activity. Overall, the RBI’s measured stance signals confidence in the resilience of the domestic economy while preserving flexibility to respond to external risks if required,” he said.
Manik Malik, CEO and president, BPTP, said that the continued stability in interest rates can help sustain this momentum, particularly across mid and premium housing segments, while maintaining overall market confidence.
Will developers pass on rising construction costs to buyers?
Lata Pillai, senior managing director and head of capital market, India, JLL, said for the time being, the status quo on interest rates is positive for the real estate market, with certainty on lending rates for both developers and homebuyers expected to keep stakeholders relatively unfazed.
However, the impact of rising construction costs looms large on the horizon, as developers may end up passing higher input costs on to buyers, potentially adversely affecting affordability. Amid the shrinking share of affordable housing, this may further impact the mid-segment buyer even as the higher-priced segments remain buoyant. However, diminishing stock market returns and overall uncertainty may start to take a toll on overall housing market sentiment to some extent going forward, she said.
While growth remains resilient, the impact of cost pressures has started to become visible and is likely to weigh in. “Overall construction costs are already on the rise led by increasing material and labour costs, which may lead to workforce inadequacy and delayed project timelines. This rise in construction cost is likely to be ultimately passed on to homebuyers in the form of higher property prices, thus affecting affordable and middle-income housing segments. However, this will depend on the intensity and duration of the ongoing global headwinds,” said Vimal Nadar, National Director & Head, Research, Colliers India
The likelihood of a potential rise in repo rate and hence home loan interest rates cannot be fully eliminated in the next few quarters, he said.
While homebuyers are likely to assess their income visibility more stringently before purchasing homes, developers are expected to prioritise construction material adequacy, cash flow management and project execution in the near to mid-term, he added.
