RBI holds Repo Rate steady at 5.25%, as expected by experts

The Reserve Bank of India’s Monetary Policy Committee (MPC) has unanimously voted to keep the policy repo rate unchanged at 5.25 percent, marking the fourth consecutive policy review without a change. The decision was taken at the MPC’s meeting held between 3 and 5 August, with the committee also retaining its neutral policy stance.

With the repo rate steady, the Standing Deposit Facility (SDF) rate remains at 5 percent, while the Marginal Standing Facility (MSF) rate and the Bank Rate continue at 5.5 percent.

Announcing the decision on Wednesday, RBI Governor Sanjay Malhotra said the MPC arrived at its call after weighing evolving domestic macroeconomic and financial conditions alongside the global outlook. He noted that the continuing conflict in West Asia has disrupted trade routes and supply chains, added to market volatility and dented business sentiment. Global growth is expected to slow, he said, while inflation is projected to stay elevated through 2026. Uncertainty has also increased as central banks diverge in approach, with some tightening policy while others remain cautious. Crude oil prices, currencies and financial markets, Malhotra added, continue to fluctuate with developments in the conflict.

Real estate sector welcomes continuity

For India’s real estate sector, the decision to hold rates has been welcomed as a source of much-needed predictability heading into the festive season.

Amit Goyal, Managing Director, India Sotheby’s International Realty, said the timing was significant. “This is the fourth consecutive RBI policy with the repo rate unchanged at 5.25%, and we welcome the decision. Despite higher crude prices and June retail inflation rising to an 18-month high, the RBI has prioritised stability. It reflects confidence in the resilience of the Indian economy, while remaining watchful of global risks. For real estate, the timing is significant. This is the last policy review before the festive season, giving homebuyers and developers greater certainty to plan purchases and launches. Stable EMIs are particularly important as some overheated markets begin to see demand moderate. We expect this unchanged interest rates, together with easing crude prices, to support buyer sentiment and help sustain housing demand through the festive season.”

Vimal Nadar, National Director & Head of Research, Colliers India, pointed to the balancing act at play. “RBI has kept the repo rate unchanged at 5.25% along with continuation of neutral stance, reflecting a vigilant approach amid the resurgence of West Asia crisis, volatile crude prices, fluctuating rupee and persistent inflationary risks. Although trade uncertainty, tariff rate recalibrations & renewed supply chain disruptions could weigh on growth prospects and affect multiple economic sectors, Indian real estate holds potential to navigate the downside risks successfully. Additionally, stability in interest rates continue to provide comfort to homebuyers, especially in the affordable and middle-income segments. With the upcoming festive season, stability in EMIs could boost housing demand in the next few quarters. However, affordability pressures stemming from rising construction and labour costs may moderate sales as compared to the previous year. Developers, meanwhile, are likely to remain focused on cost management and timely project deliveries. Moreover, the recent RERA advisory to grant a four-month extension to eligible projects impacted by the West Asia conflict, provides a much-needed regulatory relief to affected developers.”

Shrinivas Rao, FRICS, CEO, Vestian, struck a note of caution alongside the optimism. “The RBI’s decision to keep the repo rate unchanged at 5.25% depicts its balanced approach amid prevailing geopolitical uncertainty, an uneven monsoon, and rising domestic inflation. The stable monetary policy is expected to support capital inflows into the real estate sector at a time when developers continue to grapple with elevated construction costs and softer foreign investment sentiment due to the West Asia conflict. The current mortgage rates may offer a limited window for prospective homebuyers before any potential policy tightening. If crude oil prices and inflationary pressures intensify in the coming months, the RBI may consider a 25-basis point rate hike in its next MPC meeting.”

Akhil Saraf, Founder & CEO, Reloy, said predictability itself was the real win for the market. “The RBI’s decision to keep the repo rate unchanged at 5.25% brings much-needed stability to the real estate sector. In today’s market, predictability is just as valuable as lower interest rates. For homebuyers, it means greater confidence in planning their finances and making purchase decisions, while for developers, it provides the certainty needed to plan investments and execute projects efficiently. Although a rate cut would have provided an additional boost to housing demand, maintaining the current rate strikes the right balance between supporting economic growth and keeping inflation in check. Overall, this policy continuity is expected to sustain positive sentiment across the residential real estate market.”

Anupam Rastogi, Co-Founder & CBO, Square Yards, said financing conditions remain attractive for buyers with strong credit profiles. “The residential real estate industry benefits from the RBI’s decision to keep the repo rate at 5.25% since it promotes a steady and predictable borrowing environment. For creditworthy homeowners, financing conditions remain appealing because some lenders offer home loans at rates as low as about 7.25%. Stable borrowing prices, developer incentives, flexible payment plans, and competitive pricing could boost buyer sentiment and promote purchasing decisions as the holiday season draws near. Because ready-to-move-in and near-completion properties offer more assurance regarding delivery and the possibility of long-term value appreciation, the atmosphere is especially favourable for individuals contemplating such properties.”

Amit Prakash Singh, Co-Founder and CBO, Urban Money, echoed the sentiment. “The RBI’s decision to maintain the repo rate at 5.25% reinforces a stable and predictable borrowing environment, which is positive for the residential real estate sector. With select lenders offering home loans at rates starting at approximately 7.25%, financing conditions remain attractive for creditworthy homebuyers. As the festive season approaches, stable borrowing costs, combined with developer incentives, flexible payment plans and competitive pricing, could strengthen buyer sentiment and encourage purchase decisions. The environment is particularly favourable for those considering ready-to-move-in and near-completion properties, which offer greater certainty around delivery and the potential for long-term value appreciation.”

Taken together, the industry view is one of cautious optimism. With rates on hold and the festive season approaching, developers and homebuyers alike appear set for a stable few months, even as global risks tied to the West Asia conflict and crude oil prices continue to warrant close watching.