By Accommodation Times News Services
As per the economic and industrial demand Reserve Bank of India (RBI) announced rate cut for the third time in a year, following the subdue inflation and stable economic growth. Since January this year the repo rate has been so far cut by 75 basis points and currently, it stands at 7.25%
Many economists and experts were predicting the rate cut. Real estate industry hails the RBI’s repo rate cut and predicts growth of the industry.
Mr.Lalit Kumar Jain, CMD, Kumar Urban Development Ltd and former Chairman CREDAI, said, steps like these are gradational in renewing the zest of the real estate sector. However, he regretted that the net effect has to be translated into an interest rate cut that has not happened as yet.
“It’s about time the government revisits the actions like the one the NDA Government took in 1998 in order to fast track India’s growth story,” he said and suggested special tax free housing bond at 5% and granting home loans at 7%.
Ms. Manju Yagnik, Vice Chairperson, Nahar Group, welcomed the move of RBI Governor Raghuram Rajan and said, “It is a positive and growth oriented step by RBI which will further give the much needed push to the real estate industry. The reduction in the repo rate will help reduce the EMI’s of home buyers and lessen their burden as they are already loaded with various other taxes. This rate reduction augers well for the economy as it reflects the growing confidence of the government and will help in propelling growth of the Indian economy.”
Mr. Rohit Poddar, Managing Director, Poddar Developers, called the move as a positive step and expressing his future predictions, said, “This is a very progressive step and a sound balance between stimulating growth and yet being cautious for curbing retail inflation post what is expected to be a bad monsoon. Food prices are expected to rise post monsoon, and oil is now $ 60 + despite reports from leading experts predicting oil prices to be sub $ 50. I hope the banks and financial institutions now pass on the substantial reduction in rates over the last 6-9 months to end customers and also to the Corporate Sector. Unless this happens, consumption will remain subdued and consequently the investment cycle will not pick up.”
Mr. Manoj Paliwal, CFO, Omkar Realtors, said, “Considering the demand of Indian Economy for low rate of interest, pressure to have reasonable exchange rate and to take care of possibility of hike in interest rate by the US Federal Reserve, the reduction of Repo Rate by 25 basis points is a step in the right direction. RBI will need to ensure that benefits of policy decision reach to the end users.”
Mr. Rajesh Jain, Managing Director, Neumec Group, said, “The cut in 25 basis points is surely in the right direction and brings cheer to existing and prospective home buyers Having said that the benefit of the same should be passed on to buyers by retail banks which currently is not the case. Interest rates play an important role in qualifying for and servicing a home loan but with the floating rate one can avail of this benefit. The rate cut is substantial, buyers can go back to their lender and ask them to trim EMI component or reduce your loan tenure. If the benefits are passed to homebuyers a rate cut such as this can lift the sentiment and encourage more corporate and retail consumers to opt for loans.”
Mr. Rajesh Prajapati, MD, Prajapati Constructions, explained RBI rate cut as an excellent move but needs more, he said, “Though a welcoming move, RBI could have done much more. However, the rate cut will not only help in lowering the home loan interest rates making home buying a reality but will also accelerate growth of the real estate industry.
He further emphasized that RBI must look at real estate with new optimism.
“Also Banks must pass on the benefit to customers by cutting the interest rates as this will motivate the home buyers to buy their dream home”, added Mr. Prajapati.