Homebuyers, realty sector to benefit from RBI’s repo rate cut

MUMBAI:Homebuyers have some reason to cheer as the Reserve Bank of India (RBI), in a surprise move, cut Repo Rates by 25 basis points (bps).

MUMBAI:Homebuyers have some reason to cheer as the Reserve Bank of India (RBI), in a surprise move, cut Repo Rates by 25 basis points (bps).

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This may lead to a lower EMIs and make cheaper funds available to builders.

Experts said the move will have a positive impact on the realty sector, which has been facing a massive slowdown.

Shishir Baijal, chairman and managing director, Knight Frank India, said, “A 25 bps cut in policy rate is encouraging and signals well for the real estate sector.”

Anshul Jain, managing director (India), Cushman & Wakefield, said, “Lower home loan rates could trigger greater optimism among homebuyers and spur home-buying decisions.” Repo rate is the interest banks pay when they borrow money from the RBI to meet their shortterm fund requirements.

The RBI has reduced the repo rates to 6.25 % from 6.50 %. Since January 2015, the RBI has reduced the repo rates by 175 bps.

Builders have welcomed the decision taken by the RBI.

“The revision in repo rate is a bold move, especially at a time when developers are burdened with ever-increasing cost of funding,” said Parth Mehta, managing director, Paradigm Realty.

“While the RBI has cut policy rates at regular intervals, banks have not followed suit by reducing them proportionately,” said Surendra Hiranandani, chairman and managing director, House of Hiranandani.

“It is critical for banks to reduce interest rates so the benefits can be enjoyed by the end user,” he added.