RBI's 25-bp Rate Rise Raises Home Loan Costs but Keeps Property Demand Steady
The Reserve Bank of India lifted its repo rate by 25 basis points to 5.50%, prompting concerns over higher borrowing costs, yet industry leaders say long-term housing demand will remain robust.
On Wednesday the Reserve Bank of India raised its benchmark repo rate by 25 basis points to 5.50%, marking its first hike in almost four years. Industry representatives, including the head of CREDAI West Bengal and senior executives from Primarc Projects, Purti Realty, Emami Realty and Knight Frank India, warned that the move will raise loan rates for homebuyers and increase developers’ cost of capital. They anticipate a modest short-term slowdown, particularly for first-time buyers in the affordable-to-mid segment as the festive season begins.
Nonetheless, they argue that long-term demand stays strong, driven by preferences for prime locations, better quality, rising incomes and ongoing infrastructure projects. Developers are responding with flexible payment schemes and targeted offers to sustain quarterly sales momentum. The central bank signaled that further tightening will be data-dependent, but does not expect a material disruption to the sector’s overall trajectory.
Why it matters
Higher interest rates affect mortgage affordability, influencing millions of homebuyers and the broader Indian economy.
In this story
