RBI not to change its repo rate, giving hope to the real estate

At its first bi-monthly monetary policy meeting of 2016, Reserve Bank of India (RBI) has kept its key policy rate as it is. RBI, Governor Raghuram Rajan is keeping a wait and watch approach before taking any action on reducing rates.

Already, RBI has reduced its repo rate by 125 basis points since January 2015. But, the banks have been slow and apparently unwilling to pass on the benefits of the RBI’s rate cuts to the consumers just because of the lack of confidence on the real estate projects.

After RBI has aimed to lower the rates, at which banks lend to the consumers, only a few banks reduced their lending rates. Rajan is currently keeping an eye on the inflationary pressure and will take corrective action, accordingly.

Kishore Bhatija, MD, Real Estate Development, K Raheja Corp said, “With RBI reducing repo rates, there has been a positive boost in buyer sentiment most recently. We are hopeful that the new budget will address some much-needed realty reforms in the administrative, land, legal and financial aspects.”

VP of Marketing, Dheeraj Realty, Ravi Gurav reflected that, “The bank interests rate has come down and we can see many new launches taking place. The developers are waiting for better times and we hope people (home buyers) will take a decision in the next two to three months.”

The real estate sector envisage that, the RBI will cut the key policy rate this year as well the bank loans are available at reduced interest’s rates. Cheaper home loan rates indicate a higher demand for home loans and in this way increased demand in the housing market.