What does RBI's repo rate cut, from 6.25% to 6%, mean for borrowers? If banks transfer interest rate relief to customers, the 25 bps rate cut is expected to reduce the EMI payments. It thus means a lot for borrowers, especially in terms of home loans and personal loans.
Experts anticipate that banks passing on the benefit will reduce home loan interest rates by around 8 percent and provide considerable relief to common borrowers. Umesh Gowda HA of the Sanjeevini Group, said, “The two consecutive rate cuts (of 0.25% each in February and April) will give a fillip to the housing sector as rate cut transmission by banks will lead to home loan rate falling below 8 percent for most banks, thereby benefitting a large section of new and existing borrowers.”
According to Anil Rego of Right Horizons, the cut “is likely to lower borrowing costs, boost liquidity, and support domestic demand—especially as fiscal measures and improving rural prospects kick in.”
Arvind Kapil of Poonawalla Fincorp, feels the repo rate cut, “will stimulate the banking and financial services ecosystem in the right direction and support the broader goal of sustaining a healthy and resilient economy”.
According to Boman Irani, president of CREDAI National, the RBI's decision “is likely to improve home loan affordability, stimulate housing demand, and provide a strong impetus to the mid-income and affordable segments, where interest rate sensitivity remains high.”
Anshul Jain of Cushman & Wakefield feels that the rate cut is a particularly positive development for the housing market. “The RBI’s shift in stance to ‘accommodative’ sends a strong signal of its intent to support growth. This will definitely encourage homebuyers' sentiment in mid-segment, often seen as the major category within the housing market demand.”
Aman Sarin, the CEO of Anant Raj, feels the rate cut will make home loans more affordable for buyers. “ We anticipate more rate cuts in the coming quarters, and the biggest beneficiaries will be home loan borrowers—particularly those taking big-ticket loans for mid- and premium homes. Lower interest rates enhance both affordability and loan eligibility, helping many fence-sitting buyers finally make their purchase decisions,” Sarin said.
Udit Jain of ONE Group Developers thinks that the move will “benefit buyers across segments, from affordable housing to premium and luxury categories, making home ownership more accessible and attractive”.
Samir Jasuja of PropEquity noted that house prices have jumped 50 percent post-Covid, and feels that the two consecutive rate cuts “will provide a cushion to home loan borrowers as EMIs will come down” and fence-sitters will thus be encouraged to make home purchases.
(By arrangement with livemint.com)
