Repo rate hike may moderate festive housing sales, caution CREDAI and NAREDCO
Real estate industry bodies CREDAI and NAREDCO have warned that the Reserve Bank of India's recent repo rate hike could increase mortgage costs and cool housing sales during the festive season.
News Desk · October 9, 2026 · 1 min read
Housing sales across major urban centres could encounter headwinds during the ongoing festive season following the Reserve Bank of India's decision to raise the benchmark repo rate by 25 basis points to 5.50 per cent, real estate industry bodies CREDAI and NAREDCO stated.
The central bank's monetary policy committee announced the rate increase, its first in nearly four years, alongside a shift in stance to calibrated tightening. Industry leaders noted that the policy shift would inevitably raise home loan borrowing costs for retail buyers at a crucial juncture for annual property registrations.
Commenting on the development, CREDAI National President Shekhar Patel noted that the upward adjustment in the repo rate would directly influence fund availability and lending costs. He observed that while the festive period traditionally generates high volumes of residential transactions, higher interest burdens could introduce a degree of caution among prospective buyers.
NAREDCO President Praveen Jain echoed similar views, pointing out that floating-rate borrowers will see their equated monthly instalments increase as commercial banks transmit the policy rate hike. Several public and private lenders have already announced upward revisions to their lending rates in response to the central bank's directive.
Despite the near-term pressure on financing costs, both apex real estate bodies emphasized that the foundational demand for housing remains solid. Industry representatives maintained that residential markets display structural resilience, underpinned by long-term aspirations for homeownership and steady urban end-user demand.
Analysing the broader financial commitment involved, Patel noted that home loans typically span terms of 15 years or longer, during which borrowers navigate varying interest cycles. He added that short-term policy adjustments should be evaluated against broader macroeconomic growth and long-term economic stability rather than in isolation.
Market participants expect urban housing markets to absorb the initial impact of dearer credit as developers roll out festive schemes and flexible payment options to sustain buyer engagement through the fourth quarter.
