Since the calendar year 2025 commenced, whenever the Reserve Bank of India (RBI) makes a policy announcement, home seekers start rejoicing and with good reason. Earlier this month, RBI announced a third consecutive rate cut, which translates into significant benefits accruing from the sustained reduction in terms of lending rates, once passed on to home loan seekers by banks and financial institutions.
Dr. Niranjan Hiranandani, Chairman, NAREDCO, explained, "The RBI's proactive measures, including slashing the repo rate by 50 basis points to 5.50% and reducing the CRR by 100 basis points, mark a pivotal intervention to bolster India’s GDP growth amidst a fragile global economic environment. The liquidity infusion of Rs 2.5 lakh crore is set to drive capex expansion, stimulate demand, and catalyse growth across sectors. With a focus on leveraging India’s demographic dividend and accelerating digitalization, these steps underscore the RBI’s commitment to sustaining growth forecasts while reinforcing India's position as a key pillar in the global economic landscape."
Improving affordability
According to him, for the real estate sector, this rate reduction is set to bolster credit lending, accelerate buying velocity, and enhance development momentum. The resulting decline in home loan interest rates will directly benefit home buyers by improving affordability and cushioning their financial commitments. Lower mortgage rates make home ownership more attainable, driving greater demand and fostering stronger sales indices. Additionally, this move could spur refinancing activity and strengthen investment interest in branded properties known for their attractive returns, particularly among Grade A developers.
Strategic approach
“While the dynamics of real estate are influenced by broader economic factors, RBI’s commitment to maintaining a lower rate environment will rekindle market confidence, enabling growth in portfolio expansion and refinancing activities. This policy intervention reinforces confidence in India’s economic resilience and demonstrates the central bank’s strategic approach to supporting critical sectors like housing, which are key drivers of the nation’s overall growth momentum,” the NAREDCO Chairman added.
Welcome move
Prashant Sharma, President, NAREDCO Maharashtra, concurred. "A 50-bps reduction in the repo rate will help in bringing down home loan interest rates further, which is a welcome move for home buyers and the real estate industry. Lower inflation expectations and a stable GDP outlook will give confidence to developers and investors alike. We believe this move will play a crucial role in reviving housing demand and sustaining growth in the sector."
Market sentiment
Sachin Mirani, President, CREDAI-MCHI Thane, opined that for Thane homebuyers, it is a continuation of previous reductions in home loan interest rates which results in making home ownership more affordable and accessible. In the past few months, RBI has been reducing repo rates. This will enhance market sentiment, and result in a more vibrant property market in Thane.
This positive trend will encourage Thane’s first-time home buyers and those planning on upgrading to bigger sized homes in Thane. This will lead to better buyer sentiment, in turn boosting demand for Thane’s real estate, said Faiyaz Virani, Hon. Secretary, CREDAI-MCHI Thane.
Anuj Puri, Chairman, ANAROCK Group, emphasised that this is the third consecutive time this year that the apex bank has cut the repo rates. This effectively lowers the cost of borrowing, making home loan EMIs easier on the pocket and thereby directly improving affordability for buyers. This can potentially boost demand in the Indian real estate sector, especially in affordable and mid-income segments. It is sincerely hoped that banks pass on the benefits of this move seamlessly to borrowers. The CRR reduction will help boost liquidity in the banking system, which means that banks have more funds to lend. Developers will be able to access more capital for their projects, and this can positively impact project completion timelines. It also gives banks the option to reduce home loan interest rates, which will again positively impact sentiment in the affordable and mid-income segments.
