Real Estate Reaction on RBI Repo Rate Cut

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New Delhi, August 10, 2019:
Mr. Prateek Mittal, Executive Director, Sushma Group

The reduction of 35 basis points in third bimonthly RBI monetary policy by the central bank will provide the required impetus to the economy of the country. This move along with infusing liquidity in the banking system will also result in reduced burden on banks’ resources which will further bring down interest rates on home loans providing the much needed boost to the real estate industry.

It will also provide a liquidity push to the developers as well, boosting the growth of the sector.

Pradeep Aggarwal, Co-Founder & Chairman, Signature Global and Chairman – ASSOCHAM National Council on Real Estate, Housing and Urban Development

With RBI reducing the repo rate 4 times in a row, shows a softer stand towards lending. A few banks have passed the benefits to the customers and I am sure they will surely reduce the lending rates, though marginally, which can boost the sentiments in the market. Also with the push which the government showed towards affordable segment in the Union Budget 2019. I am sure end users would now be more motivated, to purchase their homes, post the repo rate cut.

Enhancing exposure limit of a bank to a single NBFCs to 20% of the Tier 1 capital of the bank from 15% earlier means banks can increase their lending to NBFCs and the limit of Priority sector lending through NBFCs has been to Rs 20 lakh from Rs 10 lakh earlier will further boost the affordable housing sector in country.

Manoj Gaur, MD, Gaurs Group & Chairman, Affordable Housing Committee, CREDAI

“The repo rate cut by 35 basis points to 5.4 per cent is a constructive move for the real estate sector. With the fourth consecutive rate cut, we expect the demand of housing to rise marginally. The rate cut is expected to further bring down interest rates on home loans and auto loans as the monetary transmission of previous policy easing have been limited. It will also help boost credit growth in the banking system”.

Mohit Goel, CEO, Omaxe Ltd.

With inflation well within the RBI range and economy showing signs of slowdown, the repo rate cut of 35 bps to 5.4% is on expected lines. Despite repeated cuts in policy rates by the RBI, fourth since January 2019, commercial banks have not passed on the cut to borrowers. As a result, lending rates continue to remain high. The slowdown in economy coupled with high lending rate has accentuated the slump in housing demand.

Amit Modi, Director, ABA Corp & President (Elect) CREDAI Western UP

This is the fourth straight rate cut from the RBI and it results in an overall decline of 110 basis points or 1.1 percentage point in the key lending rate, not just that the benchmark rate is now at the lowest since April 2010, but unfortunately there is still no major effect on the ground, and this is mainly due to the fact that despite the repeated reductions, the majority of banks are not passing the benefits of the rate cuts to end consumer. Rather than making sure that consumers are offered reduced interest rates on home loans which will result in lower EMIs, there is still an ongoing tendency of cushioning the bottom lines by the banks, which ultimately turns out to be counterproductive to the move itself. The Monetary Policy Committee has once again maintained an accommodative stance; we hope that the banks are also more accommodative in their stance towards the home buyers aspirations.

Mr. Uddhav Poddar, MD, Bhumika Group

Reduction in repo rate by another 35 basis points will bring down construction finance costs and ease out home loan rates, giving yet another boost to the real estate sector. Apart from this, RBI has also enhanced exposure limit of banks to a single NBFCs, which in turn would boost credit to real estate sector and tackle the liquidity crunch. The step was necessary and the Govt and RBI have taken timely steps to ease the liquidity situation to some extent. We expect some more measures in the coming days.

Ashish Bhutani, CEO, Bhutani Infra

“The rate cut by 35 basis points is a positive move thus providing the required impetus to the economy of the country. The much needed step taken by the Apex Bank aims to curb the liquidity situation. However, we expect the banks to transmit the rate cuts to the borrowers to get the desired results of this constructive move.”

Dhiraj Jain, Director, Mahagun Group

With the fourth cut in a row, the repo rate stands the lowest level in the past nine years. This is good news especially for home loan borrowers with the RBI bringing down the key policy rate for the 4th time in its monetary policy review, signalling lower interest rates. Now, we are eying on banks to pass on the benefit of this rate cut to the respective borrowers of home loan. Once banks reduce the level of interest rates, it will eventually witness the increase of demand for homes in real estate sector.

Mr. LC Mittal, Director, Motia Group

The fourth consecutive repo rate cut in the bimonthly RBI monetary policy is a commendable and much needed step taken by the central bank to curb the liquidity situation. With a reduction of 35 bps, the repo rate now stands at 5.4 per cent which will further push the housing segment after all the initiatives taken by the government to boost the segment.

We expect the banks to transmit the rate cuts to the borrowers to get the desired results of this constructive move.

Deepak Kapoor, Director, Gulshan Homz

The liquidity situation might see a change as RBI has enhanced exposure limit of a bank to a single NBFCs to 20% of the Tier 1 capital of the bank from 15% earlier, which will mean that banks can increase their lending to NBFCs. We hope that banks will give the benefits to the buyers and there will be reduction in EMIs. Sales, launches and delivery will likely improve in near future. With festive season around the corner, the impact of the move may be visible in the upcoming months especially in the affordable and mid-segment category.

Dhruv Agarwala, Group CEO, Housing.com/Makaan.com/PropTiger.com

In line with the government’s commitment to revive growth in India’s economy, the RBI has lowered the repo rate to a record level. This should help pump-prime the overall economy and also provide the real estate sector much needed relief. Lower interest rates along with the higher tax deduction on home loan interest payments that was announced in the Budget in July, would encourage homebuyers to take out home loans to buy property. Additionally, the RBI’s move to enhance the exposure limit of a bank to a single NBFC will infuse more liquidity into the system for NBFCs, which in turn will help real estate developers who are in desperate need for capital at this point of time.”

Vikas Bhasin, CMD, Saya Group

Four consecutive repo rate cuts this year is a positive outcome for the economy. Real estate sector welcomes the move by the RBI and hope that this will solve the liquidity problem and increasing EMI burden of people. The sector flourishes in a positive economic environment and the constant effort by the RBI is a clear indication that the authorities are serious towards tackling the issues that are affecting the real estate sector. For now affordable housing will get a big boost especially at a time when festival season is around. Mid-segment housing too may also witness an increase in sales but the scale of effect on sales might be a little less than the affordable segment. Peripheral towns, Tier II and Tier III might see a good response to real estate project where prices are under check and with latest rate cuts there is more likelihood of increasing affordability and hence conversion into good sales.

Amit Raheja, CMD, Wealth Clinic

The benchmark lending rate cut by 35 bps to 5.4 percent is a positive move for real estate sector after the budget and before the start of the festive season. The move, which is fourth rate cut this year, will surely give boost to the price sensitive affordable housing segment as they will get to pay lower EMIs along with other incentives that they get in affordable segment. Also, tier II and Tier III cities will benefit as the houses there will witness more sales after the expected cut in EMIs. It is also expected that banks will increase their lending to NBFCs and hence the liquidity situation in real estate sector will improve. If this happens then the sector will be back on fast track. We might see more project launches and deliveries of projects that are stuck. However, all of it depends on the transfer of benefits to the borrowers.

Pankaj Jain, Managing Director, Realistic Realtors

The fourth successive cut in the policy rates is a welcome step. This will benefit the economy as a whole as well as the entire real estate industry, which is one of biggest employment generator in the country. The whole financial system, particularly the NBFC sector is facing some stress. In absence of bank financing, it is the NBFCs which have accounted for large share of funding to the realty sector. It was apt for the apex bank to announce measures to reduce the stress on NBFCs, which is vital for the quicker revival of the economy

Ashok Gupta, CMD, Ajnara India Ltd.

The reduction in policy rates, while on the expected lines, is a welcome step. We hope commercial banks also do their bit. Also, important is the enhanced exposure limit of banks for a single NBFC. The move will ensure greater funds for NBFCs and it would help realty sector a great deal.

Parveen Aggarwal, Founder and Chairman, Signature Sattva

Four consecutive repo rate cuts are not only a positive outcome for the real estate sector but also for the eligible new home borrowers who can take advantage of the subsidies scheme under PMAY (Pradhan Mantri Awas Yojana). More money available in banks at a lower cost will result in increased purchasing power as there will be a lower EMI burden on the buyers. It will also lighten the liquidity crunch and lower the cost of finance for the developers.

Mr. Anupam Gupta, Sales and Marketing Director, GBP Group

The cutting down of repo rate of 35 bps to 5.4% by the central bank is an encouraging step to boost the economy of the country. The positive move is in line with the market’s expectations and will certainly smoothen up the liquidity crunch to a great extent.

It has come as a good news for the home loan borrowers and will boost the real estate sector. Now, we are eying on banks to pass on the benefits of this rate cut so the home loan borrowers can avail the advantages and utilize it realize their dream of buying a house.

Rajat Goel, Joint Managing Director, MRG World

Seekers of Affordable housing get a lot of benefits and now with this rate cut they will be able to cut down on EMIs. This is a positive step for the segment, which has the maximum demand. Affordable housing projects were already getting good response but now with the latest rate cut, the people will get more benefit. It is always heartening to see the EMI burden coming down as we want our buyers to enjoy their dream home with relaxed mind. We welcome the rate cut by the RBI, which is a fourth one this year, and shows the positive intention of the premier body to work towards the solutions.

Harinder Singh Hora, Managing Director, Reach Group

With the fourth rate cut in a row the real estate sector is expected to escalate further, benefiting not only the developers but also the home buyers. The Apex Bank has taken the much needed step to curb the prevailing liquidity situation. With lower repo rates banks would be able to set the direction and reduce the level of interest rates, which eventually witness the increase of demand for homes in real estate sector.

Dhiraj Bora, Head Corporate Communication, Paramount Group

The fourth consecutive repo rate cut from the RBI is in lines with the expectations. We hope that the reduction is passed on by the banks to the home buyers. Lower interest rates, along with the recent reduction in GST rates for under construction properties, should provide the fillip to end-user demand. On top of it the upcoming festival season might turn out to be a good one for real estate.

Corporate Comm India (CCI Newswire)