News: Developers and analysts weigh how RBI’s 25 bps repo hike may affect home loans and festive demand-07-10-2026

Real estate experts say the Reserve Bank of India’s 25-basis-point repo rate hike, largely expected, could weigh on sentiment and affordability, especially in interest-rate-sensitive housing segments and just as the festive season begins. The backdrop is persistent inflation and geopolitical uncertainty from the West Asia crisis. Commercial real estate is likely to stay relatively insulated, anchored by demand from global capability centres (GCCs), technology, BFSI and other occupiers, while retail could see near-term pressure as borrowing costs affect spending.

The repo rate moved from 5.25% to 5.50%, the first hike since February 2023, and the stance changed to calibrated tightening. CREDAI president Shekhar Patel said the SDF rate is now 5.25% and the MSF rate and Bank Rate 5.75%, so the impact on liquidity needs watching. He noted that India’s growth is robust and housing need will keep rising with urbanisation, and that for a buyer the interest rate at any moment is only one part of a longer decision.

Anuj Puri, chairman of ANAROCK Group, said the festive season is key for housing demand and higher borrowing costs will hit buyer sentiment, with a direct link to discretionary spending. Anarock data show residential prices up 7% y-o-y and about 1,00,220 sales in the top seven cities in Q3 2026, up 3% y-o-y and 10% q-o-q, of which affordable housing was 16%. Puri said even a modest rise in EMIs will lead affordable-housing buyers to defer purchases or recalculate budgets, so this momentum will now be tested.

Sushil Mohta, president of CREDAI West Bengal, said the hike will lift lending rates, making home loans costlier for buyers and construction finance costlier for developers. Higher EMIs may lead buyers in the affordable and mid-income segments to defer purchases, and developers may face pressure on margins, budgets and cash flows, possibly leading to higher property prices.

Vimal Nadar, National Director and Head, Research at Colliers India, said developers could absorb much of the financing pressure through festive discounts and innovative pricing plans. Shishir Baijal, Chairman and Managing Director of Knight Frank India, expects some affordability pressure in lower-priced segments but no material disruption to the broader trajectory soon.

Lata Pillai, head of capital markets, India, at JLL, said the rate certainty of the past year is likely ending, floating home loan rates will be repriced and higher construction costs passed on to buyers, with mid-segment affordability under scrutiny. Strong GDP growth, investment and a healthy construction sector should absorb the impact, and the pace of any further hikes will matter more than one 25 bps move, she said.

Jash Panchamia of Suraksha Infra and Developers Limited (formerly Jaypee Infratech Limited) said a steady rate environment would have been more comforting, but end-user demand should anchor growth. Nitesh Kumar, MD and CEO of Emami Realty, said affordability may weaken temporarily for financing-dependent first-time buyers, while developers are offering flexible payment plans and targeted offers. Pradeep Aggarwal, founder and chairman of Signature Global, expects the sector to stay resilient.

Anshuman Magazine, Chairman and CEO of CBRE for India, South-East Asia, Middle East and Africa, said the inflationary environment, driven by the West Asia conflict, high crude prices and supply chain disruptions, resembles 2022 after the Russia-Ukraine conflict. India’s growth fundamentals are relatively strong, he said, and what matters now is where inflation and rates go, and whether this stays a calibrated response rather than the start of a long tightening cycle.