The RBI has slashed the repo rate by 25 basis points, bringing it down to 5.25%. Sanjay Malhotra, the Governor of the RBI, announced that this reduction will be implemented immediately. This decision is expected to provide significant relief to homebuyers as it will lead to lower EMIs and make home loans more affordable.
With a lower repo rate, banks are anticipated to reduce their interest rates for customers with floating rate loans, which primarily include home loan borrowers. Most home loans sanctioned post-October 2019 are linked to the External Benchmark Lending Rate (EBLR) system, which is directly tied to the repo rate.
For these customers, the benefits of a reduced interest rate are swiftly realized—either through lower EMIs or shorter loan repayment terms. The best part is that customers do not need to take any action themselves.
Industry Experts Weigh In
Azad Ahmed, President of Business Development & Operations at BigTech, remarks, 'The repo rate cut will benefit the NCR commercial sector immensely. Over the years, this area has emerged as India's most affordable commercial hub, attracting investment plans from numerous foreign companies. We anticipate a robust pipeline of commercial real estate projects, with increased pre-commitment, long-term lease agreements, and institutional investments.'
Ashok Singh Jahnapuria, CEO & MD of SS Group, states, 'The RBI's decision is good news for potential homebuyers planning to invest in property. This move will benefit both homebuyers and developers, especially given the high demand for luxury homes in Gurugram. Those hesitant in purchasing homes may now reconsider their decisions.'
A Boost for the Real Estate Sector
Harvinder Singh Sikka, Chairman of Sikka Group, expresses, 'This rate cut is a pivotal decision for the real estate sector, offering not just relief to homebuyers but also invigorating the entire sector. This initiative will enhance sales, create job opportunities, and accelerate infrastructure development. Increased demand will lead to a rise in construction activities, thereby boosting employment opportunities. The growing real estate sector will pave new directions for infrastructure development, including roads, bridges, and public transportation.'
Ashish Bhutani, CEO of Bhutani Group, says, 'This repo rate cut will propel the real estate sector forward. Lower interest rates directly enhance purchasing power, strengthening market access for common customers. Moreover, it opens doors to new investments across all property segments, creating positive market sentiment.'
Easier Home Buying for Everyone
Director of Roots Developers, Jitendra Yadav, comments, 'With the repo rate cut, the real estate sector will gain momentum, making loans cheaper and encouraging people to buy more homes. Developers are likely to launch new projects and ensure timely possession.'
Sudeep Bhatt, Director of Strategy at Whitland Corporation, notes, 'Reduced repo rates will expedite new project initiations and enhance the sales of unsold homes.'
Rishabh Periwal, Senior VP of Pioneer Urban Land & Infrastructure, states, 'Buying a home will become more accessible for the public, boosting demand while benefitting developers who will receive funding at reduced interest rates, aiding in the efficient and timely completion of projects.'
Trend Analysis
Experts collectively believe that the repo rate cut will make home ownership easier than before. Typically, banks opt to keep customer EMIs unchanged, shortening the loan tenure unless the customer requests a reduced EMI. An analysis by BankBazaar reveals that in line with RBI's previous decisions, most public sector banks have already slashed rates on new home loans by up to 100 basis points. Currently, major lenders like HDFC Bank, ICICI Bank, SBI, Bank of Baroda, and Canara Bank offer home loans starting between 7.3% to 7.9%.
