In light of the real estate industry's severe sales slump, the National Real Estate Development Council (NAREDCO) has urged the government and the Reserve Bank of India to reduce home loan rates to 6% in order to revive the housing market. In many cities, sales have remained stagnant as a result of high interest rates, inflationary pressures, and deteriorating consumer sentiment in the Indian housing market. Why NAREDCO is Pushing for 6% Home Loan Rates
According to NAREDCO, reducing home loan rates to 6% will encourage first-time buyers and middle-class families to invest in their dream homes. In India, home loan rates are currently between 8% and 9%, making EMIs unaffordable for many and decreasing housing sales. A reduction in the interest rate on home loans will directly lessen the financial burden placed on prospective homeowners, making housing more accessible and increasing demand in the housing market. NAREDCO President stated that reviving the housing sector will have a multiplier effect on the economy as real estate supports over 250 allied industries.
The Housing Market's Present Sales Slump India's housing market has witnessed a sales slump due to rising borrowing costs, input cost inflation, and cautious spending behavior among buyers. Many potential home buyers are deferring their purchases in anticipation of lower rates or price corrections, which is creating a liquidity crunch for developers.
According to reports from property consulting firms, new home sales have slowed in many metropolitan areas, resulting in an accumulation of unsold inventory. According to recent data, housing sales in Q1 2025 have declined by nearly 15% compared to the previous quarter, showing clear signs of a housing market slowdown.
How Lower Home Loan Rates Can Boost the Housing Market
If home loan rates are brought down to 6%, it will:
Reduce the monthly EMI for buyers, making homes more affordable.
Encourage fence-sitters to enter the market, increasing transaction volumes.
Boost liquidity for developers, allowing faster project completion.
Support affordable housing and mid-segment demand, which forms the backbone of the Indian housing market.
NAREDCO’s Vision for Market Revival
Recognizing the real estate industry's contribution to GDP and the creation of jobs, NAREDCO has consistently advocated for policy interventions to support it. By urging the government to reduce home loan rates, NAREDCO aims to:
Revive buyer confidence in the housing market.
Increase the rate at which unsold inventory is absorbed. Stimulate demand across Tier 1 and Tier 2 cities.
Create a stable environment for developers to plan future projects.
Government and RBI’s Role
To achieve 6% home loan rates, the RBI may need to consider repo rate reductions or targeted schemes for the housing sector. The government can explore interest subvention schemes or incentives for banks to offer lower interest rates on home loans, especially for affordable and mid-income housing segments.
Conclusion
The housing market in India needs a targeted intervention to overcome the current sales slump, and NAREDCO’s recommendation to reduce home loan rates to 6% could be a potential game-changer for the sector. A robust real estate sector not only provides homes to millions but also drives economic growth and employment opportunities in the country.
For buyers, this could be the right time to prepare for home ownership, as the policy environment may soon become favorable, making affordable housing a reality for many Indian families.
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home loan rates
housing market
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