Will repo rate hike slow home sales?

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The Reserve Bank of India’s Monetary Policy Committee has decided to increase the policy interest rate, or repo rate, by 25 basis points (0.25 percentage point), making it 5.50%. The repo rate is the rate at which the RBI lends money to banks. When it goes up, borrowing generally becomes more expensive for banks, which can lead to higher interest rates on home loans, car loans and other lendings.

The decision was taken keeping various factors in mind, including the ongoing West Asia crisis, higher crude oil, high petrol and diesel prices and a deficit monsoon, which is leading to a hike in food prices.

This decision may affect homebuyers as it will lead to high EMI charges, thus impacting their ability to buy a house.

Manoj Goyal, director of Forteasia Realty Pvt. Ltd., says, “In Chennai, unlike Mumbai or Bengaluru where speculation is a major factor, most property purchases are by people who plan to live in them. A small interest rate increase of 0.25% therefore doesn’t stop demand completely, it just makes it grow a little slower,” he says.

Goyal expects the impact to be more visible in areas such as the IT corridor, Old Mahabalipuram Road (OMR), Pallavaram and developments along GST Road, where first-time homebuyers account for a significant share of demand. Buyers in established premium neighbourhoods such as Adyar and Alwarpet, who rely less on home loans, are likely to be less affected.

“While the latest increase is unlikely to bring housing activity to a halt, it could make affordability and the pace of sales more important considerations for both buyers and developers in the months ahead. The biggest concern for developers is buyers in the ₹50-₹75 lakh budget segment, which accounts for most of Faridabad’s sales, delaying the closure of transactions by a month or two” Aman Gupta Director, RPS Group

However, NoBroker’s Q3 2026 data presents a more positive picture of Chennai’s demand. According to the real-estate platform, housing demand in the city grew 13% year-on-year, making it one of the two fastest-growing metros in its assessment. It attributes the growth to steady hiring in technology, global capability centres (GCCs) and manufacturing.

The repo rate hike will possibly affect buyers in the ₹50 lakh to ₹1.2 crore segment, who are more likely to rely on home loans. Even a small change can lead to reconsideration of budgets and negotiations, leading to postponement of house-buying.

According to Goyal, prospective buyers have been seeking estimates of their revised EMIs on homes priced around ₹80 lakh in Perumbakkam and Thirumazhisai.

A 25-basis-points increase could lead to rise of ₹800 on the EMI on a ₹50-lakh home loan, depending on the interest rate and loan tenure.