With home loan interest rates expected to decline further, the Indian real estate market is poised for a significant boost in FY26. The recent 25-basis point repo rate cut by the Reserve Bank of India (RBI) has set the stage for a potential easing cycle, making homeownership more affordable and enhancing loan eligibility for buyers.
Industry experts anticipate additional rate reductions in the coming months, which could further drive demand across all segments—particularly in metro and Tier II cities. As borrowing costs decline, both first-time buyers and investors are likely to benefit, reinforcing real estate as a preferred asset class in a growing economy.
Udit Jain, Director, ONE Group Developers, says, “Home loans play a pivotal role in home buying, particularly for end-users, as the majority rely on financing to purchase their dream homes. A reduction in interest rates directly impacts affordability, making homeownership more accessible and boosting demand across all segments of the housing market.”
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In its last Monetary Policy Committee (MPC) review meeting, the RBI reduced the repo rate by 25 basis points after maintaining a consecutive status quo for eleven meetings. This marked the beginning of a much-anticipated rate cut cycle, and further reductions are expected in the upcoming MPC meetings.
A sustained decline in interest rates is expected to act as a catalyst for the residential real estate sector in FY 2025-26. “Lower home loan rates will not only reduce the overall cost of borrowing but also enhance loan eligibility, encouraging more buyers—both first-time homeowners and upgraders—to enter the market. Additionally, with increasing urbanization and strong demand for quality housing in metro and Tier II cities, favorable lending conditions will further accelerate the growth of the housing sector in the coming year,” added Jain.
Real estate demand continues to remain robust, particularly in the high-end and luxury segments, driven by strong investor confidence and rising aspirations for premium living. The anticipated softening of home loan interest rates is expected to further fuel this momentum, making homeownership more attractive for both end-users and investors.
“In the last MPC meeting, the RBI Governor indicated that macroeconomic conditions are aligning favorably, paving the way for further measures to support economic growth.
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