The real estate sector has expressed disappointment over Reserve Bank of India Governor Raghuram Rajan’s decision not to cut the repo rate in the bi-monthly monetary policy review on Tuesday. However, leading players feel that banks should transmit the previous rate cuts announced by Rajan to improve home loan offtake and provide a boost to stagnant sales.
“In the longer run we definitely see rate cuts that will boost the housing demand in India. We have seen few banks passing rate cut benefit to the home borrowers but we expect more banks to follow the same trend in the coming months,” Neeraj Gulati, Managing Director, Assotech Realty said.
Gaurav Mittal, Managing Director, CHD Developers Limited, seconds Gulati. “Banks need to pass on the benefits of the past policy rate cuts to home buyers by reducing the mortgage rates thereby making the home loans more affordable for the buyer,” Mittal said.
While repo rates were left unchanged by Raghuram Rajan in the bi-monthly monetary policy review, the RBI has reduced the policy rate by nearly 150 basis points since January 2014 when it stood at 8 per cent. Banks, however, have not kept pace in reducing lending rates.
Real estate players feels a further rate cut would have resulted in softer lending rates and provide a boost to offtake of residential properties.
“The real sector sector is disappointed with status-quo on policy rates. It will take the sector longer time to come back on the rails. The residential property market has not been doing well and there was expectation that RBI would reduce the policy rates to provide a boost,” Shishir Baijal, chairman and managing director, Knight Frank India said on policy rates remaining constant.
“RBI Governor Raghuram Rajan’s decision to keep the repo rate unchanged is disappointing, though not unexpected. Since demand in real estate and allied industries remains sluggish, a rate cut could have improved liquidity and created renewed interest in property purchase. But with the RBI stating its monetary policy stance is “accommodative”, one is hopeful a rate cut may be in the offing in the latter half of 2016,” Vineet Relia, Managing Director of SARE Homes, said.
Raghuram Rajan in his monetary policy review kept the key rates, including repo rate and CRR unchanged at 6.5 per cent and 4 per cent respectively.
Aman Agarwal, Director, KV Developers & Governing Council Member NAREDCO, is also hopeful that further rate cut would be announced by the RBI in the next monetary policy review. “Real estate sector was expecting a rate cut which could very well help in bridging the demand, supply gap and brings liquidity to the market. We hope the next RBI announcement will provide much needed boost and encouragement to home buyers, for which they are waiting long”.