New Delhi, May 22 (IANS) Real estate developers lauded Reserve Bank of India’s 40 basis point repo rate cut and said that it would help boost demand for homes as the economy goes through a tough time amid the coronavirus pandemic.
Sector players, however, said the rate cut should be transmitted by the banks to the retail borrowers fast enough so that home buyers can avail of the benefit and demand for apartments grows. They also pressed for the need for one-time restructuring of loans taken by developers.
Noting that the sector expected more stringent measures from the RBI to revive the economy, Satish Magar, President, CREDAI National said: “The interest rate should be reduced with firm liquidity measures as this is the need of the hour, backed by one-time restructuring of loans to help the real estate sector from crumpling.”
He said the government now needs to ensure that banks are forthcoming in passing on the benefits.
Dhruv Agarwala, Group CEO of Housing.com, the rate cut will not only help developers but also the homebuyers who have been under extreme pressure due to the prolonged lockdown which has impacted their income.
“This along with the move of extending loan moratorium for another three months will be extremely helpful in lowering the burden for those who are paying EMIs or using credit cards and lower financial stress. What needs to be seen is how quickly the banks reflect this change in their respective rates,” Agarwala said.
Manju Yagnik, Vice Chairperson of Nahar Group, observed that the reduction in repo rate will encourage prospective homebuyers to move ahead with their plans of investing in a home, thus help in boosting the demand. It will also enable reviving growth in the long-term.
She, said that although RBI has estimated that GDP growth will be negative for FY 2020-21, the fact that monetary policy transmission is improving coupled with the expectation of normal monsoon which will spur economic activities.
Shishir Baijal, Chairman & Managing Director, Knight Frank India, was of the view that it would have been a big respite if the long-standing real estate industry demand for a one-time restructuring of loans had been allowed along with the measures announced on Friday.
He said while the RBI has taken steps to boost liquidity, one of the real challenges remains boosting the demand which may be addressed in subsequent announcements.
According to Anuj Puri, Chairman of Anarock Property Consultants, the rate cuts combined with the further extension of loan moratoriums by 3 months up to August 31, 2020 augurs well for the real estate sector in the times to come.
“Beyond doubt, repo rate cuts do uplift the sentiments of home buyers even further. Home loan interest rates have already gone down substantially over the last year, and are currently at an all-time low averaging between 7.15-7.8 per cent,” he said.
According to Rohit Poddar, Managing Director of Poddar Housing and Development Ltd, the measures that the RBI is taking to try and boost the economy is positive, however the central bank must insist on transmission of liquidity and the rate cuts to the borrowers from the banks and financial institutions, which is currently not happening as fast as it should be.
Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani, said another repo cut by 40 basis points to 4 per cent is also a welcome move and with the cost of funds coming down for banks now, borrowers will stand to gain as the EMIs on their home loan are expected to fall.
“However, quick transmission will be key to the huge liquidity infused by RBI. All these measures augur well for the real estate sector during such trying times. We hope that the government will continue to take all the necessary actions in the near future for the betterment of the overall economy,” Hiranandani said.