News: RBI's repo rate cut to boost home sales-04-04-2019
Updated On: April 04, 2019
RBI's monetary policy committee (MPC), led by Governor Shaktikanta Das, on Thursday announced a 25 basis points.
BENGALURU: Real estate builders have cheered the Reserve Bank of India's (RBI) decision to reduce repo rate by 25 bps, a move that may help ease home loan rates and boost sales.
RBI's monetary policy committee (MPC), led by Governor Shaktikanta Das, on Thursday announced a 25 basis points. (One basis point is equal to one hundredth part of percentage) cut in, in its first bi-monthly rate review of financial year 2019-20. The repo rate now stands at 6 per cent.
Property Builders hope the current rate cut would translate into lower EMIs on housing loans and will aid the sluggish property market. “We hope that the reduction in rate are 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. The real estate sector has been looking forward to such stimuli to boost sales velocity,” said *Shishir Baijal, Chairman & Managing Director, Knight Frank.
This is the second time in 2019 that the central bank has cut the repo rates. Reserve Bank of India (RBI), in its bi-monthly monetary policy held on February 7 has cut the key policy rates by 25 basis points (bps)
As per Anarpck Consultants, back-to-back repo rate cuts by the RBI are indeed the perfect start to a new financial year, resulting in overall reduction of 50 basis points since February 2019.
"The repo rate has returned to the same level as in April 2018. This will augur well for the Indian real estate sector and keep the momentum going in the coming year," said Anuj Puri chairman Anarock Property Consultants.
Last time the central bank cut rates was in August of 2017. However, RBI has kept the rates unchanged in the last two monetary policy announcements held in October and December 2018 this fiscal. It hiked rates twice in June and August 2018, by 25 bps both times.
"The onus is now on the banks to concurrently reduce home loan rates further, thereby encouraging more fence-sitters to take purchase decisions and giving another boost to the real estate sector," said Puri.
Indian real estate market showed some signs of recovery in 2018. The sector already saw an uplift in homebuyer sentiment due to the multiple sops offered by both the Government and the RBI in just the first three months of 2019. These measures have contributed to a 12% increase in housing sales in Q1 2019 across the top 7 cities, said Anarock.
