RBI’s Neutral Stance at 5.25%: Predictable EMIs and Growth for Housing & Infrastructure- Key Highlights
- Stable Repo Rate: RBI maintains 5.25% after FY25 cuts, signalling a neutral stance and extended interest rate stability.
- Homebuyer Confidence: Predictable EMIs improve affordability, support long-term planning, and encourage first-time and premium segment purchases.
- Developer & Project Support: Steady borrowing costs enable disciplined capital allocation, timely project execution, and smoother new launches.
- Commercial & REIT Liquidity: Measures like direct bank lending to REITs enhance financing options and reduce borrowing costs for commercial projects.
- Macro & Market Outlook: Low inflation (2.1% FY26) and robust GDP growth (~7.4%) provide a conducive environment for sustained real estate and infrastructure growth.
The Reserve Bank of India (RBI) on Friday chose to keep the repo rate unchanged at 5.25%, providing continued stability to the real estate, construction, and infrastructure sectors in its first monetary policy review following the Union Budget 2026. The decision was announced by RBI Governor Sanjay Malhotra after a three-day meeting of the Monetary Policy Committee (MPC).
By maintaining a “neutral” stance, the central bank signalled an extended period of stable interest rates, a positive outcome for homebuyers, developers, and infrastructure companies, as borrowing costs for housing loans, project financing, and long-term infrastructure projects are expected to remain steady in the near term.
Governor Malhotra noted that the decision aligns with market expectations, supported by strong domestic growth momentum and easing global trade pressures following India’s recent trade agreement with the United States. He emphasized that India continues to be one of the fastest-growing major economies, offering a supportive macroeconomic environment for urban development, housing demand, and infrastructure expansion.
On the inflation front, the RBI projected Q1 inflation for FY 2026–27 at 4%, slightly above its earlier estimate of 3.9%, with expectations of a moderate rise to 4.2% in the subsequent quarter. Retail inflation for the current financial year is estimated at a low 2.1%, creating a favourable backdrop for construction input costs and housing affordability.
The central bank estimated GDP growth for the current financial year at 7.4%, highlighting strong economic fundamentals. Growth for the next financial year is projected at 6.9% in Q1 and 7% in Q2, broadly in line with the Economic Survey’s forecast of 6.8%–7.2%, underscoring sustained momentum in real estate development, infrastructure spending, and related sectors such as cement and steel.
Real Eatate Industry's Take
Industry experts view the RBI’s decision to maintain the repo rate as a significant step in providing policy stability and market predictability. Stable borrowing costs are expected to boost homebuyer confidence, enabling clear financial planning and manageable EMIs. For developers, this predictability supports disciplined project execution, efficient capital allocation, and timely completions, reducing uncertainty in funding and delivery timelines.
Experts also highlight that measures like direct bank lending to REITs are likely to enhance liquidity and lower financing costs for commercial projects, further strengthening market sentiment. Combined with ongoing infrastructure investments, regulatory reforms, and fiscal support, the steady policy stance creates a conducive environment for sustained growth in housing, construction, and allied sectors.
Industry Experts Opinion
Mr. Aman Sharma, Founder & Managing Director, Aarize Group, said, “Today’s homebuyers are highly sensitive towards the change in interest rates, as they tend to make decisions based on long-term financial comfort rather than short-term incentives. So, we anticipate that the repo rate will be unchanged, giving the housing market much-needed predictability. Low interest rates encourage potential buyers to move forward with planned purchases, as a stable rate helps to maintain end-user confidence, makes transactions easier, and allows the housing market to grow while sustaining the real estate sector’s growth momentum.”
Ms. Manju Yagnik, Vice Chairperson, Nahar Group & Senior Vice President, NAREDCO–Maharashtra, said, "With the RBI maintaining a status quo on the repo rate at 5.25 percent, policy continuity has brought much-needed stability for home loan borrowers. An unchanged rate has ensured that EMIs on floating-rate loans remain steady, offering predictability at a time when housing demand continues to stay resilient across major urban markets. This clarity on borrowing costs has supported affordability and enabled homebuyers, especially first-time buyers to plan long-term purchases with greater confidence. From a real estate perspective, a neutral monetary stance has also allowed developers to plan financing and project execution more efficiently, without the pressure of fluctuating interest costs. As inflation trends have remained benign and macroeconomic fundamentals stayed robust, a consistent policy environment has reinforced confidence among end-users and investors and supported sustained momentum in the housing market in the quarters ahead.”
Mr. Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd., said, “The RBI’s decision to hold the repo rate steady at 5.25% offers stability for interest-rate–sensitive sectors like real estate in the current macroeconomic environment. With inflation remaining at manageable levels and the benefits of earlier rate cuts continuing to flow through to homebuyers in the form of improved affordability, residential demand has remained resilient. The Union government’s decision to raise public capital expenditure to ₹12.2 lakh crore in FY27, as announced in the Union Budget 2026, further strengthens the growth outlook through infrastructure-led development. Supported by stable monetary policy and sustained public spending, the real estate sector will continue to play a pivotal role in driving economic growth, employment generation, and urban development across the country.”
Mr. Ashok Kapur, Chairman, Krishna Group & Krisumi Corporation, stated, “The RBI’s decision to keep the repo rate unchanged at 5.25% reinforces policy stability and provides a supportive backdrop for the residential real estate market. While a rate cut would have lowered borrowing costs, a steady interest rate environment enables homebuyers to take long-term purchase decisions with greater confidence and predictability. This is particularly relevant for the premium housing segment, where buyers place stronger emphasis on product quality, location, and long-term value creation rather than short-term rate movements.
For developers, rate continuity allows for more disciplined planning of project launches, construction schedules, and capital deployment. With premium homes forming an increasing share of residential sales across key metropolitan markets, stable monetary policy is expected to help sustain demand momentum and reinforce positive sentiment over the coming quarters.”
Mr. Vijay Raundal, Managing Director, Teerth Realties, said, “Keeping the repo rate steady at 5.25% and assuming a normal inflation trajectory for FY26, the RBI has offered much, needed clarity at a very crucial moment particularly for capital, intensive sectors such as the real estate industry. The combined effect of previous rate cuts is likely to keep enabling the demand from the end, users, especially those coming under schemes like PMAY 2.0 in Tier, 2 markets. Being in a better position to lend, banks will be able to finance more projects which, in turn, would lead to the creation of more jobs. The continuation of such a policy, along with the run of public capital expenditure, might set the stage for the stable cycles of investments that in turn would be the backbone of the broader economic growth most closely related to housing and infrastructure development.”
Mr. Anurag Goel, Director, Goel Ganga Developments, said, “The decision by the RBI to keep the repo rate unchanged at 5.25% mirrors their trust in the inflation situation becoming more and more favorable for FY26. Since inflation is expected to be at 2.1%, home loan affordability will continue to be a key support factor, particularly for user, buyers in next, tier cities. It is evident that developers can now map out their sales and investments more efficiently with policy certainty at this human, and at the same time, continued liquidity in the market may facilitate obtaining funds for construction projects. This moderate approach thus enables a consistent absorption of residential segments without leading to speculative over, enthusiasm.”
Mr. Shashank Gupta, Director, RPS Group, stated, “It remphasizes a very necessary element of policy stability when the RBI has forecasted the inflation rate at 2.1 per cent for FY26 and thus, holding the repo rate at 5.25 per cent. Continued housing demand will mainly depend on the housing market in Tier, 2 cities where greater affordability has already started to result in the increased interest of buyers after the total rate cuts in the past year. Stable interest rates allow for better budgeting and planning in both luxury and mid, income housing sectors, at the same time, the availability of funds for developer increases as the liquidity in the market becomes more comfortable. The situation highly agrees with the government’s initiative of urban infrastructure where the outcome will be a conducive environment for the real estate sectors steady and sustainable growth in the long term.”
Mr. Siddharth Maurya, Founder & Managing Director, Vibhvangal Anukulakara Private Limited, said, “The Reserve Bank of India prioritizing stability with keeping the repo rate at 5.25%, a choice that will influence the financial planning of retail borrowers, particularly home loan customers. There will be no changes to interest rates, and therefore consumers will have to focus their financial planning on EMI payments. With rates remaining unchanged, consumers will be able to prepay their loans without any changes to their plans. Considered use of fixed deposits will also be encouraged. Remaining on the conservative side will be preferable and will prevent consumers from over leveraging themselves. The overall pause will provide households with the opportunity to improve their balance sheets, tailoring their repayment plans to the increase in their income over the long term rather than the expectations dictated by policies in the short term.”
Mr. Sam Chopra, President, CEO & Country Head, eXp Realty India, said, “The RBI’s decision to hold the repo rate at 5.25% provides timely policy stability as the market enters its next growth leg. For homebuyers, the biggest takeaway is predictability in EMIs, which improves purchase confidence and supports steady absorption across both end-use and investment segments. For the sector, the message is equally clear: with growth resilient and inflation still contained, the focus now shifts to faster transmission of past cuts, tighter execution by developers and renewed momentum in well-priced, well-connected micro-markets. If liquidity remains supportive, we should see a stronger 6–9 month runway for residential demand and selective traction in income-yielding assets—while remaining mindful of global commodity and currency risks that could cap any near-term expectation of further rate easing.”
Mr. Shrinivas Rao, FRICS, CEO, Vestian, noted, “The year 2026 began with the repo rate being maintained at its three-year low. This is expected to enhance stability and provide an impetus to economic growth amid prevailing global uncertainties. Meanwhile, the RBI is also assessing market reactions following recent trade developments with the US and Europe. Taking cognizance of these factors, the repo rate is anticipated to remain stable in the coming months, supported by controlled headline inflation and robust economic growth.
The real estate market continues to be supported by low mortgage rates, which are stimulating demand. Affordable financing for developers, along with the ready availability of foreign capital, is expected to accelerate construction activity nationwide and help narrow the demand–supply gap.”
Mr. Amit Goyal, MD, India Sotheby’s International Realty, said, “The RBI holding the repo rate steady, largely in line with expectations, brings a sense of reassurance to the housing market. For homebuyers, especially end-users, it reinforces confidence to move ahead with long-term decisions without worrying about sudden cost shifts. At the same time, globally, many major central banks have also adopted a cautious stance on interest rates amid moderating inflation. For investors, a consistent policy environment strengthens India’s credibility as a long-term real estate destination. A stable monetary environment also strengthens India’s appeal to domestic and global investors, reinforcing optimistic moderation in the market’s long-term fundamentals, despite global headwinds.”
Mr. Ravichandran Purushothaman, President, Danfoss India, said, “From a manufacturing and industry standpoint, the Union Budget 2026 is a blueprint for long-term resilience rather than a set of one-off announcements. The launch of ISM 2.0 and the expanded focus on electronics and capital goods signal a clear intent to build indigenous depth across the industrial value chain.
What is particularly encouraging is the practical attention given to the revival of 200 legacy industrial clusters and the robust support for MSMEs through the new SME Growth Fund and enhanced liquidity measures. These interventions, coupled with the push for infrastructure in Tier 2 and 3 regions, will create a more inclusive manufacturing ecosystem that can scale beyond the metros.
The Budget also reflects a steady commitment to India’s green growth, with strategic measures for energy storage, CCUS, and nuclear power. At Danfoss India, we welcome this forward-looking vision. We remain committed to being the preferred partner in India’s journey toward competitive decarbonization, providing the energy-efficient solutions and automation technologies that enable Indian industry to do more with less.”
Mr. Ashish Jerath, President- Sales & Marketing, Smartworld Developers, stated, “A steady repo rate at 5.25% reinforces a sense of financial continuity at a time when long-term visibility is key for homebuyers. For a new generation of homebuyers, young professionals, entrepreneurs, and aspirational first movers, this kind of policy consistency offers a strong foundation to act with confidence. As demand shifts toward high-growth urban corridors, success will hinge on timely delivery, design intelligence, and the ability to turn stability into opportunity,”.
Mr. Ashish Agarwal, Director, AU Real Estate, stated, “The RBI’s decision to keep the repo rate unchanged provides timely clarity for the real estate sector while balancing inflation management with the need to support economic growth. From a developer’s perspective, this continuity brings much-needed certainty. Stable borrowing costs support disciplined project execution and responsible pricing while reassuring buyers who are assessing long-term home loan commitments. In a market driven largely by end-user demand, particularly across urban centres and emerging micro-markets, the unchanged repo rate helps sustain confidence and enables the housing sector to continue on a steady and sustainable growth path.”
Mr. Parvinder Singh, CEO, Trident Realty, said, “The decision to keep the repo rate unchanged reinforces a stable and supportive environment for the real estate sector in the year ahead. Both long-term investors and homebuyers are likely to remain confident due to this monetary policy continuity. A strong foundation for asset creation and wealth preservation is created by monetary stability and the government’s ongoing emphasis on capital expenditure. As the housing market develops, this kind of alignment between monetary conditions and fiscal intent is essential for promoting high-quality development, prudent capital deployment, and sustained demand. This stability can eventually support India’s transition to a resilient and inclusive Viksit Bharat by converting economic momentum into long-term growth. “
The RBI’s decision to maintain a stable repo rate offers the real estate and infrastructure sectors a period of predictability. Homebuyers can plan their investments with confidence, while developers benefit from steady borrowing costs, enabling smooth project execution and timely completions. The neutral stance also supports commercial real estate financing, with measures aimed at improving liquidity and reducing funding challenges.
Looking ahead, this environment of monetary stability, combined with ongoing infrastructure initiatives and supportive regulatory measures, creates a strong foundation for sustained growth. The sector is well-positioned to leverage these conditions for new project launches, enhanced market confidence, and steady investment, fostering long-term opportunities for buyers, developers, and investors alike.
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