Realtors ask banks to pass on benefits of RBI rate cut

Developers say cheaper home loans will help revive housing demand especially during upcoming festive season

Hailing the Reserve Bank's decision to cut interest rate by 0.50 per cent, real estate developers today asked the banks to pass on the benefits to home loan borrowers that would help revive housing demand especially during upcoming festive season.

"It is a very welcoming announcement which RBI Governor has made, 50 basis points was long overdue. Not only realty but all manufacturing industry and all businesses in general are more than encouraged by this announcement," realtors' apex body CREDAI's National President Getamber Anand said.

"Our appeal to all banks is to pass on this rate cut to home buyers who avail home loans because that is what RBI governor has been saying that all the rate cuts that have happened have not translated into the reduction of home loan rates. This is now imperative and it must be done to benefit the end user," he added.

Commenting on the rate cut, India's largest realty firm DLF's CEO Rajeev Talwar said: "Very good announcement by RBI. Have left the job to the Finance Ministry to now convince the banks to lower their base rate."

Stating that the RBI has reduced the key interest rate by 125 basis points in last nine months while banks have so far cut rates only by 40 basis points, Talwar said "banks should pass on the benefits to the home borrowers which will mean very good for the real estate industry which has large unsold inventories".

He also asked developers to give some incentives to the buyers during festive season to sell these unsold stocks.

Property consultant CBRE South Asia Chairman & MD Anshuman Magazine said the rate cut would provide the necessary support to the economy as well as the real estate sector.

"The RBI's proposal to reduce the minimum risk weightage on individual housing loans for low cost homes will also help revive sales," he added.

Tata Housing CEO and MD Brotin Banerjee said with festive season around the corner, this was the "perfect time" for the RBI Governor to announce the rate cut of this magnitude.

However, he said that it was important that the banks translate the rate cuts into lower lending rates so that consumers could leverage the benefits of this announcement.

JLL India Chairman & Country Head Anuj Puri said: "As opposed to the market's expectation of a 25 basis points cut, the RBI has delivered an astounding 50 basis points reduction. With this, it has clearly abandoned its cautious baby-steps approach and assumed a bolder stance".

Welcoming the repo rate cut ahead of festivals, Omaxe CEO Mohit Goel said, "It's high time banks reduced interest rates and also increased lending in the housing segment".

Sare Homes MD Vineet Relia said this move would have positive impact on buyer and developer sentiment.

"Real estate is a rate-sensitive sector and the lowering of the repo rate is likely to open up the market for easier housing finance options. We are hopeful financial institutions would follow suit and pass on the benefits immediately to the customer," Relia added.

Realtors' body NAREDCO Chairman Navin Raheja welcomed the reduction in repo rates, saying this would ease the burden on the buyers and developers.

"We are hopeful that with this interim announcement of rate cut the banks will take the cue and pass on the benefits to the end user which will trigger the demand and offtake of housing ahead of the festive season," he added.

Property consultant Knight Frank India CMD Shishir Baijal said that a cut in the repo rate by the RBI was the need of the hour at this juncture, when the real estate industry is reeling under tremendous pressure as both sales and launches have plummeted to the tune of around 60 70 per cent.

However, Baijal said "the transmission of this rate cut by banks to consumers has to be more aggressive to help the market reap the benefits of this reduction".

Cushman and Wakefield India MD Sanjay Dutt said the rate cut should act as a catalyst to revive sentiment in realty sector.

"At a time when Indian cities are witnessing subdued housing sales, this correction in prime lending rates would help stimulate home buyers interest and spur home-buying decisions," Dutt said, while adding that the extent to which lenders pass on the benefits to customers would determine the actual magnitude of increased housing sales.

Mumbai-based developer HDIL's Vice Chairman and MD Sarang Wadhawan said: "We expect banks to reduce interest rate by 25-50 basis points making home loans more attractive which shall witness an uptake in the housing demand.

"RBI has also proposed for a reduction in the risk weights on affordable housing applicable to lower value but well collateralised individual housing loans. Both these moves are positives for the housing sector, the spiral effect of which would have far-reaching implications going forward," he added.

Sunteck Realty CMD Kamal Khetan said this is great news for the real estate sector as the rate cut would also lead to a significant reduction in home loan rates thereby reducing EMIs of home buyers.

NCR-based Gaursons MD Manoj Gaur said the banks should now quickly reciprocate and reduce the interest rates on loans so that the borrowers could be benefited.

Supertech Chairman R K Arora said the rate cut at a time when the festival season is approaching, was bound to send positive sentiments in real estate market.

Realty portal CommonFloor.com Co-founder and CEO Sumit Jain said that if banks reduce home loan interest rates, it may give a major boost to the sentiments of the home buyers and thus push up home sales.

ABA Corp Wholetime Director Amit Modi said the Finance Ministry and the RBI should ask Banks to transfer the benefits to the end consumer.

Inder Arora, Chairman, 3D Buildcon said this rate cut will definitely boost up sales in the coming festive season, while Rattan Hawelia, Chairman of Hawelia Group hoped that the rate cut translates into lower rates for home loans.