Developers react to RBI’s repo rate cut


Developers React To RBI’s Repo Rate Cut

Kishor Pate, CMD – Amit Enterprises Housing Ltd.

The RBI’s big repo rate cut is encouraging, but definitely not a game-changer as yet. The cut in repo rate is magnanimous and bigger than expected, and surely make a difference in sentiment. However, there is invariably a lag between the directives given by the RBI with regards to lowering lending rates, and banks complying with these directives. Reduced lending rates are critical at this point, and the rate of loan purchases via home loans must pick up significantly to bring about a revival in the real estate market. This is especially true for cost-sensitive markets like Pune. The leading nationalized banks must proactively take up the initiative of aligning their lending rates to affordability, so that other banks will respond to the need to stay competitive and follow suit.

Arvind Jain, Managing Director – Pride Group

The latest revision in the REPO rate is generous and will certainly boost the sentiments surrounding the real estate market. If they follow the signals that the RBI has sent out, they will be able to offer loans at more attractive rates. Cheaper loans for home buyers will prompt a renewed interest in home purchase. Given that the RBI governor also intends to support affordable housing with less stringnent lending norms, the cost of funding for real estate developers active in this segment will also reduce. Real estate developers are definitely in need of a positive change in the lending environment, since they have been battling massively increased development costs and have simultaneously been trying to keep property pricing within affordability.


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