Lower Home Loans Expected After the RBI Repo Rate Cut
In order to withstand growth with the nation’s inflation, the Reserve Bank of India had cut key interest rates by one quarter of a point to 6% after four out of six Monetary Policy Committee (MPC) voted in favour of it. This was the first cut in repo rates since the October of last year.
Once the banks decide to pass on the benefit to its customers, experts believe that the interest rates will drop to around 8%. After the repo rate cut, Axis Bank also initiated its plans in providing affordable housing schemes. In the new scheme Shubh Aarambh Home Loans that has been initiated by Axis Bank, borrowers will be able to avail waiver of 12 EMIs for a loan amount of upto Rs.30 lakh. Furthermore, the people of the nation can now look at affordable housing options in the upcoming festive season. Axis Bank Home Loan is also available to it’s customers with affordable interest rate. However, it may take a while until banks pass on the benefit to the customers and it certainly won’t be an instantaneous growth in the real estate sector.
The deceleration of the real estate industry has been going on for a few years now and the current demonetisation has just deteriorated the situation further. The decision to cut the rates is expected to generate discounted housing loans and create a surge in real-estate sales believes developers and consultants.
This cut in rates is extremely critical for the economy to grow and couldn’t have come at a better time says DLF CEO Rajeev Talwar. He goes on to say, “The Indian economy is at a point of inflection. Easing procedural bottlenecks, speedier project clearances and reviving credit flows to the productive sectors such as real estate are critical for the economy to decisively move to a higher growth trajectory. Another small rate cut in the coming months should not be ruled out.”
Vineet Relia, Managing Director, SARE Homes says, “The RBI has taken a positive step by offering 25 bps reduction in the repo rate which will act as a catalyst for investment revival, going hand in hand with favourable government measures like RERA and GST which will boost housing demand benefiting both developers and buyers. This will also impact the economy positively and give a much needed credit flow.”
Samantak Das, the Chief Economist & National Director — Research, Knight Frank India said, “With real estate prices remaining stagnant, interest rate showing a declining trend, tamed inflation, RERA in place, the confidence of home buyers will be back in the market. This is an opportune time as the festival season is just over a month away. The move to cut rates is bound to increase sales traction. There may not be a full-fledged revival of the real estate market but it certainly heralds an initiation of a growth trajectory in the residential space.”
The repo rate is at a seven year low at the moment and is on track to drive growth in the real estate sector amongst other sectors. Not only will it reduce the cost for buyers, it will help reduce the cost for developers as well. This will heighten property demand in the country and everybody from real estate agents to developers to home buyers are looking forward to the latest revolution in the industry.