RBI (Reserve Bank of India) slashes repo rate by 25 basic points today. It will reflect on home loan interest and affordable housing. The repo rate cut after 5 years, will boost property investment in India.
The decision is looked upon as wonderful news from the Government’s end. As the relief came after Finance Minister, Nirmala Sitharaman raised no tax eligibility to Rs. 12 lakhs.
Sanjay Malhotra, RBI Governor announced a repo rate cut from 6.5 percent to 6.25 percent. It means home loan and EMIs on housing projects will come down. The decision by Reserve Bank of India receives welcome from Indian real estate. As, developers and experts are of the opinion that it will boost homebuyers confidence.
The monetary policy committee and the Reserve Bank of India (RBI) decided to curtail the repo rate. The slight cut in repo rate after a prolonged tenure of 5 years will affect liquidity.
However, the move will lower home loan EMIs and will enhance the borrowing capacity.
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“We hope interest rate cuts will be passed on to the consumer, and the home loan rates become more attractive, which combined with the earlier announced tax incentives spur residential demand across the different price brackets, but especially in the below Rs. 50 lakh category, which has been a continued weakening of demand”, says Shishir Baijal, Chairman and Managing Director, Knight Frank India.
Boman Irani, President, CREDAI National said, “This supportive monetary policy was imperative, especially after the recent 50-basic-point reduction in the Cash reserve ratio (CRR), which has already injected significant liquidity into the banking system… These measures signal a robust framework for sustainable growth, fostering confidence among homebuyers, developers, and investors alike.”
Manju Yagnik, Vice Chairperson, Nahar Group, and Senior VP, NARCEDO, Maharashtra said that the repo rate change will impact the market positively.
Reserve Bank of India and Repo Rate Cut History
Last, in May 2020, the Reserve Bank of India had a repo rate cut to lift the economy from the jolt of a pandemic. After two years, in May 2022, the Reserve Bank of India decided to raise the repo rate considering the Russia-Ukraine war.
Since then, the repo rate stood at 6.50 percent for two years.
How Repo Rate Cut by RBI will affect Property Investment
A lower borrowing cost will increase the demand for housing projects. The low-value EMIs are the key reason for this. The lower home loan interest will increase the borrowing capacity for homebuyers. Thus, aspiring property owners can consider higher-priced property.
With lucrative home loan EMIs, Indian real estate senses a significant boost in new project launches.
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For example, if you avail Rs. 70 lakh home loan at 9 percent for 20 years, then EMI will stand at Rs. 62,981. However, the same EMI will value Rs. 61,860 at 8.75 percent.
Thus, homebuyers enjoy the benefits of a repo rate cut by the Reserve Bank of India.
With the decline in the repo rate by the Reserve Bank of India, the real estate market expects a big blow to business.
