RBI gives Booster Shot to Economy Amidst COVID-19  

Repo rates remained unchanged by RBI
0 328

RBI on Friday came out with another set of announcements. The repo rate cut is a welcome move for real estate industry.

By Varun Singh

No wise man would like to not acknowledge the hard facts of deepening economic slowdown in the country.

The consumptions are down, and yes there’s a slowdown in almost all the sectors. Most of the businesses including real estate is severely impacted and there’s a need to come up with measures to uplift them.

However, the announcement by RBI can bring in some cheer for the common public along with the developers.

RBI Governor’s statement.

The RBI’s repo rate cut of 40 bps – from 4.40% to 4% now – is a welcome move.

Simultaneously, for the second time in a month, the reverse repo rate has also been slashed by another 40 bps and now stands at 3.35%.

Anuj Puri Chairman, Anarock Property Consultants says, “This is another big step which will ease liquidity for developers – the rate cut will not only send out positive signals but will enable banks to lend even more. Thus, the rate cuts, combined with the further extension of loan moratoriums by 3 months up to August 31, 2020 augurs well for the real estate sector in the times to come.”

Home loan interest rates have already gone down substantially over the last year, and are presently at an all-time low averaging between 7.15% to 7.8%.

The move by RBI will benefit only when the banks immediately passes on it to the homebuyers.

“The banks should immediately pass on the reduction in the repo to ensure the objectives of demand creation and liquidity infusion are achieved. said, Kaushal Agarwal, Chairman, The Guardian Real Estate Advisory.

Related Posts
1 of 272

RBI even announced the extension of moratorium on loans by another three months which is expected to help institutions and individuals alike.

“We would also urge the government to focus on reducing the high transaction cost, the same will go a long way in revival of the real estate sector post the lockdown,” said Agarwal.

All this will help real estate sector, as the repo rate cut will help banks to lower home loan interest rates, which may get several more fence-sitters onto the market.

“Moreover, the repo rate cut may compel banks to reduce the interest rates for FDs even further – this could result in even more people leaning towards housing as a better investment option,” said Puri.

Housing industry has got a lot of hope from the RBI announcement mades amidst this crisis.

Here is what some top developers from the country had to say on the RBI announcement today.

Dr. Niranjan Hiranandani – President – Assocham and NAREDCO, says, RBI’s proactive measure will help revive economy. It is a welcome move to convert the accumulated interest for the moratorium period into a term loan. It will also provide some relief as the borrower will not have to immediately repay the accumulated interest on the loan after the moratorium ends.

Kamal Khetan, Chairman and Managing Director, Sunteck Realty Ltd, said, ““The 40 bps cut would give big boost to demand for credit appetite among new home buyers to avail housing loan resulting in growth of real estate sector.”

Manju Yagnik, Vice Chairperson, Nahar Group and Vice President NAREDCO (Maharashtra), said, “This reduction in repo rate will encourage prospective homebuyers to move ahead with their plans of investing in a home, thus help in boosting the demand. It will also enable reviving growth in the long-term.”

Ankush Kaul, President (Sales & Marketing) – Ambience Group said, “Real estate sector in particular will get immense help from the reduction. With the demand for properties reviving gradually, it will help in reviving sales across the projects. It is understood that banks have already started to transmit the rate change further to their consumers leading to accessibility for funds.”

Also Read: RBI announcement a major relief for real estate

Leave A Reply