The RBI’s new credit policy which allows lowering of repo rate by 50 basis points is a welcome relief for the real estate sector.
The new policy will leave more money with banks to finance real estate projects and with the lowering of interest rate, the finance cost of real estate projects will come down. In addition, homebuyers will be benefited in EMIs while the loan capacity will also be enhanced for the new buyers.
If the same benefit is passed on to homebuyers, it can result in a saving of Rs 34 on every lakh of rupees. It means one could save up to Rs 21,328 on a home loan of Rs 20 lakh for 20 years at an interest rate of 11-11.5%.
Anil Sharma, the chairman and managing director of Amrapali Group and vice-president of Credai, NCR, says that the new credit policy will have a perceptible impact on demand in the housing sector. “Since 2009, it was never lowered and sentiments of buyers were negative towards purchase of houses. It is a good step by the RBI for stimulation of better monetary policy. It will certainly boost the housing sector.”
Rakesh Yadav, the managing director of Antriksh Group, says: “Such a step by the RBI will benefit homebuyers. After the lowering of repo rate by 50 basis points, we are expecting to receive a positive response. Undoubtedly, the decision by the RBI to reduce the repo rate is likely to prompt banks to bring down the lending rates on home loans. The residential segment has been able to clock good sales numbers in the last few years and this latest amendment will definitely give a positive thrust to these numbers.”
Sanjeev Srivastva, MD Assotech Limited, says: “It is unbelievable, but it has come at an appropriate time. It is a huge psychological boost to homebuyers and we are sure this is going to be a massive contributor in the growth of our GDP because it has come in the first month of a new financial year.”
R K Arora, the chairman and managing director of Supertech Ltd, says that lowering the repo rate by 50 basis points will provide real estate sector the much needed relief.
“The announcement of the RBI will leave more money with banks, which can now be used to finance real estate projects. Simultaneously, with the reduction of interest rate, the finance cost of real estate projects will come down and developers can better manage projects. Further, with the decrease of interest rate, existing homebuyers will benefit in EMIs and the loan capacity will also be increased for new buyers.”
Ashok Gupta, the managing director of Ajnara India Ltd, says: “The real estate industry can rest easy, as the repo rate reduction, if passed on to the consumer, will reduce the prevailing home loan rate in the Indian market. The initial reactions indicate that this will bring in a change in both deposit and lending rates. One will have to wait for the extent of these cuts but there is no doubt that the rates are headed south.”
Under the new credit policy, the rate cut is now certainly possible. It’s a reason to cheer for developers and homebuyers since home loan rates are likely to come down and better sales volume are expected to improve developers’ cash flows. “Home loans have been on the rise in last couple of years and were a major demotivating factor for buyers. Once the home loan rates are lowered we are expecting to see a major surge in demand,” Prashant Tiwari, the managing director of Prateek Group, says.
“The rate cut will have a good impact on the realty sector. Though the full impact on realty sector is not clear at the moment, deduction in home loan rate is more likely now. In the last two years, multiple hikes in lending rates had created havoc in the market. It affected the midsegment buyer and had an adverse effect on demand. We hope that this step will bring back the smiles to the buyers and the developers,” Deepak Kapoor, the director of Gulshan Homz, says.
Ashwani Prakash, the executive director of Paramount Group, says: “Keeping in view the upside risk of inflation, the RBI could not afford to cut repo rate for the last couple of years. Now that the inflation has moderated to approximately 7%, the cut was expected, though the risk still persists. Growth in the sector is likely to improve, supported by the rise in demand. The cut is a welcome as high interest rates were impacting demand on one hand and increasing the cost of construction on the other.”
Anuj Goel, the executive director of KDP Infrastructure says that it is a good step by the RBI, as this will improve cash flow in the sector. “It’s good news and a big relief for the common man. As the housing loan interest rate dips, it will encourage purchase of houses and ultimately benefit the real estate sector.”
Brijesh Bhanote, the director of (sales and marketing) 3C, says: “The decision of the RBI to reduce the repo rate is likely to prompt banks to bring down the lending rates on home loans. This will benefit customers and is expected to receive a positive response from them.”
Source : TOI