RBI announces third rate cut In five months
The Reserve Bank of India (RBI) has again slashed its key interest rates by 0.25%.from 7.5% to 7.25% in its monetary policy review. It is the third rate cut in the Interest rates over the past 5 months. The reduction in repo rates will escalate the downward movement of deposit rates which translates into lower rates for borrowers. The banks which did not revise their benchmark base rates during the last announcement are expected to do so now.
The effect of this slash will be reflected in the home loan rates, especially in the floating loan rates. It is widely felt that the rate cut will benefit the banking sector, which might translate into a lowering of the EMI burden currently borne by home loan borrowers.Experts feel that this move would give a positive signal that RBI is now focused on growth, as the inflation was finally under control.
The move brings cheers to real estate sector and MakaanIQ brings forward the sentiments of the realty industry.
Mr. Manoj Gaur, MD, Gaursons India Ltd: “We welcome this step by RBI although we were hoping for the 50 basis points reduction. However, we are happy as this decision will bring a huge relief to the sector which was battling through tough times. Now with this move we expect the sales to improve as more potential customers will think of buying homes as the interest rates will be reduced. Now we have to wait and see that when will the banks and Home loan providers will reduce the interest rate”.
Prashant Tiwari, CMD, Prateek Group: “We welcome the repo rate cut and step taken by RBI, the real estate sector requires larger cut in the repo rate and hope the RBI continued the monitoring easing in the coming months. This repo rate by the RBI will further reduce the cost of funds to homebuyers as well as developers as it will allow the banks to lower the interest rates. This will ensure the heightened property demand in the coming times”.
Gaurav Gupta, General Secretary, CREDAI-RNE: “The RBI’s decision to cut repo rate by 25 basis point to 7.25% from 7.50% is good news for real estate sector. This kind of repo rate cut is helpful for projects falling under affordable segment. Home loan interest affects middle class segment people as they are the ones depending on it. However, I would say that more interest rate cuts are needed if we want to see people realizing their dreams of buying homes for self use”.
Sanjay Rastogi, Director, Saviour Builders Pvt. Ltd.: "The surprise cut in repo rate will definitely help the real estate sector gain some steam which is battling with a slowdown since quite some time. People have been waiting for the house prices to come or for the EMIs to rationalize, and this cut in repo rate will definitely mean a good drop in EMIs.”
R.K Arora, Chairman, Supertech Limited. : “The announcement to cut the repo and reverse repo rates by 25 basis points by RBI is not sufficient although it is an indication of positive approach of RBI towards investment in the country, and Real Estate Industry welcomes it. The Industry was seeking a cut of 1% interest rate to bring back confidence in home buyers and investors, to provide a comfortable EMI level and to kick-start demand. The need of the hour is to reduce the cost of funding in real estate which only would bring in more investment and create more job and the RBI has not addressed this crucial issue. It is heartening to see that the Banks have started passing on the benefit of rate cut to customers.”
Dhirendra Gaba , MD Fairwealth Housing Pvt. Ltd."Reduction of .25 basis in the Repo rate was expected from the credit policy announced by the RBI today and we welcome this positive move of RBI. This is the much needed relief which was required to boost the buying sentiments in the market so that the buyers could be encouraged to invest in their desired properties as now there could be the possibility for some reduction in the home loan rate of interest which is a good news for the end users and real home seekers."
Mr. Om Chaudhry, Founder & CEO of FIRE Capital and Chairman & CEO of Astrum Value Homes: "Reduction in the repo rate of 25 basis points by RBI is a welcome step and banks should follow it with reduction in home loan interest rates. If this happens then the real estate sector will get a little boost that it was looking for. Bringing much needed cash flow into the sector it shall also help push incremental demand as the overall business environment shall start to look up and real estate being a major asset class will gain substantially".
Mr. Deepak Kapoor, President, CREDAI Western UP, "We are happy and surprise by this move of RBI to reduce the repo rate as RBI has previously reduced the rate twice unexpectedly. This move will improve the market sentiments temporarily more such steps are required by the government to uplift the real estate market. A low interest rate is essential to fulfil the housing for all dream of the government".
Rishi Mehra, Co-founder, deal4loans.com : At the starting of the year RBI repo rate was at 8%. Now, Rbi has reduced the repo rate 3 times in past 5 months. In January, repo rate was cut by 25 base points, In March it was further reduced by 25 base points to 7.5% and now it has been cut to 7.25%. So the repo rate has reduced by 0.75% in this year thus, far. However, home loan interest rates have been changed only once. In April, all major Home loan banks and corporations reduced their lowest home loan interest rates from 10.1% - 9.85%. We believe, due to RBI's monetary policies bank's hands are a bit forced to reduce interest rates and home loan interest rates will fall by atleast 0.25% in the immediate future.