The unexpected 50-bps rate cut by RBI leading to lower rates for borrowers is expected to boost the real estate sector, which has seen a sharp slowdown in sales in recent months.
Residential real estate closed last fiscal with one billion sq ft of sales, down 3 per cent year-on-year (y-o-y), largely impacted by Hyderabad, which saw a 33 per cent y-o-y decline. The Mumbai Metropolitan Region and Bengaluru were soft on volumes on account of slower launches, while the NCR continued its strong showing, with 47 per cent y-o-y growth in volume sales.
Tribhuwan Adhikari, MD & CEO, LIC Housing Finance, said a total of 100 bps rate cuts in quick succession since February signals a strong push towards accelerating economic momentum while keeping inflation well within manageable levels.
The move will catalyse a surge in home loan demand, especially the affordable housing segment and boost housing demand from July, he added.
Kanika Singh, Chief Risk Officer, India Mortgage Guarantee Corporations, said borrowers have already seen some return on investment benefits from the previous two rate cuts being passed on to borrowers and with a 50 bps rate cut, the home loan EMIs will come down substantially, provided the transmission occurs in real-time and not with a lag.
Ankit Shah, COO and CMO, Grahm Realty, said home loan interest rates are expected to come down significantly and come down to 7.5 per cent especially for borrowers with strong credit scores.
“This shift means a notable decrease in monthly EMIs. For instance, on a home loan of ₹1 crore, EMIs may now fall in the range of ₹68,000 - ₹70,000, making home ownership far more accessible,” said Shah.
Amit Bhagat, Co-Founder, CEO and MD, ASK Property Fund, said the rate cut is a significant proactive step at a time when demand for residential real estate is seeing signs of slowing down across segments due to increased prices.
A cumulative rate cut of one per cent in the last 6 months is likely to benefit the affordable segment significantly, which was most impacted due to affordability, he said.
Prashant Sharma, President, NAREDCO Maharashtra, said while cut in the repo rate will help in bringing down home loan interest rates further, the lower inflation expectations and a stable GDP outlook will give developers and investors confidence which will play a crucial role in reviving housing demand, he said.
Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory, said the revision of the standing deposit facility rate to 5.25 per cent and the Marginal Standing Facility (Bank Rate) to 5.75 per cent will ease liquidity pressures and support continued lending activity, which is critical for developers managing ongoing projects and launching new ones, he added.
Shishir Baijal, CMD, Knight Frank India, said over the last few years, the strong housing market momentum was increasingly concentrating in the premium end.
The cumulative 100 basis point cut in the policy interest rate is expected to rekindle the lower segments as affordability will witness a meaningful improvement for such homebuyers, he said
Rishi Anand, MD & CEO, Aadhar Housing Finance, said the lower EMIs will improve home loan accessibility, especially for Economically Weaker Section and Lower Income Group customers.
The low-interest environment works in synergy with government schemes like PMAY, SWAMIH Fund 2.0 and tax benefits for first-time buyers, amplifying the impact, he said.