RBI has reduced the lending rate to 6.5%
Interest on home loans is expected to come down helping the revival of housing sales following RBI’s lowering the policy rate by 0.25% on Tuesday, say realty experts.
RBI has reduced the short-term lending rate by 0.25% to 6.5%. The total reduction is now 1.5% since January last year.
CREDAI President Getamber Anand said the realty industry body is very hopeful that home buyers would get at least a 50 basis point cut in home loan rates, which would benefit the sector.
India’s largest realty firm DLF’s CEO Rajeev Talwar said: “In the interest of economic growth in India, the RBI Governor could have reduced key policy rate by 50 basis points and brought in lower borrowing cost in India.” However, he said that even 25 basis point cut is a very good signal for pushing up of housing demand.
Realty sector is facing a huge slowdown for last 3-4 years, leading to a significant delays in possession of flats to customers.
Property consultant CBRE South Asia CMD Anshuman Magazine said: “The rate cut is likely to help lower borrowing costs and support growth further in 2016. For the real estate sector this is particularly critical. “It is expected that this benefit will be completely transferred to the borrowers, which will result in lower lending rates thus helping to revive housing sales.”
JLL India Chairman and Country Head Anuj Puri said: “Real estate, along with automobile and banking, is an interest rate sensitive sector, and definitely benefits from interest rate reductions.” He added: “While on one hand, developers are doing all they can to ensure that homes become more affordable to a larger set of buyers, small steps towards rate cuts by RBI will help banks to attract genuine end-user home buyers.”
Hoping that the banks would pass on the benefit to the consumers, Knight Frank (India) CMD Shishir Baijal said the cut in repo rate would provide a huge fillip to realty sector.
SARE Homes MD Vineet Relia said the RBI move would spur demand in the sluggish housing market.
“The latest rate cut of 25 basis points together with RERA bill being implemented should give a boost to the real estate sector. Given the positive trend we expect the housing demand to grow,” said Yash Gupta, Country Head, Hines India.
Supertech Chairman R K Arora said the RBI move will encourage investments and help create demand.