How RBI’s Repo Rate Cut Will Augur Residential Real Estate?

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    If you are contemplating to buy your dream home, here is another good reason to do so now. RBI has decided to reduce the repo rate by 25 bps to 6.25 percent which in turn will bring down your rate of the mortgage.

    Over the last one year, home loans had become a more expensive proposition.  Due to RBI’s hike in repo rate (rate at which RBI lends to banks) by 50 bps , home loan interest rates have increased as much as 5-7 percent in the past one year.

    Now that the repo rates have been reduced, home loans are too expected to get cheaper. It is now up to banks to reduce lending rates and ensure that the common man reaps the benefit of this move.

    “We expect that this will cheer the sector with home loans set to be cheaper, kick-start the industry loan cycle and allow some headroom to developers, especially in the residential space,” Anshul Jain, Country Head and Managing Director, Cushman & Wakefield India, told Money Control. “A boost to home buying activity is good news, especially with associated benefits announced in the budget as well.”

    The reduction in home loan rates is expected to attract the home buyers, especially the fence sitters who have been evaluating the market for some time and are waiting for just the right moment and the right property.

    With the government push towards affordable segment in Budget 2019, the extension of the income tax rebate to Rs 5 lakh, and today’s repo rate cut, the end users are expected to be more motivated to purchase their homes.

    The increase in housing sales is expected to improve liquidity for developers as well as will help in easing their inventory burden. Further, the experts feel it will boost the rest of the economy, which can further augment housing demand.

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