The Reserve Bank of India (RBI) has yet again opted to make the residence purchase proposition easier for home seekers, maintaining the repo rate at 6.5% and reducing the cash reserve ratio (CRR) by 50 basis points to 4% in its policy review. Those who pair policy announcements with the next festive occasion have likened this to a Christmas gift in advance with the RBI playing Santa Claus, while simultaneously wishing the rate cut had been implemented on both.
Commenting on the decision, Harsha Vardhan Agarwal, President, FICCI said, “While the Reserve Bank of India’s stance on the repo rate was widely expected, we welcome the 50-bps cut in the CRR rate. This move is well-timed and practical and should help ease out the liquidity situation supporting credit and overall growth.”
Dr. Niranjan Hiranandani, Chairman, NAREDCO, stated that, “This adjustment retains a confident and optimistic tone while clearly conveying the potential benefits of such a policy change for India’s economic landscape. Lower interest rates would have made home loans more affordable, propelling demand in the real estate sector, particularly for affordable housing.”
G Hari Babu, National President of NAREDCO, described the RBI’s decision as a balanced approach to sustaining economic stability while fostering liquidity. “This move aligns with the real estate sector’s ongoing need for growth support amid evolving market dynamics. The unchanged repo rate ensures continued affordability for homebuyers and stability in lending rates, both critical factors in sustaining the demand momentum witnessed in residential and commercial real estate. The reduction in CRR is a welcome step, as it releases additional liquidity into the banking system, providing financial institutions with greater flexibility to offer loans at competitive rates. Buyer sentiment in the real estate sector remains positive. However, we hope that the RBI will consider reducing repo rates in its next decision to give a greater impetus to affordable housing,” he said.
Manju Yagnik, Senior VP, NAREDCO, Maharashtra, said, “The RBI’s decision to retain the repo rate at 6.5% for the 11th consecutive time is a balanced approach to manage growth and inflation. A steady rate ensures consistent repayment terms, which increases the confidence of homebuyers and encourages investments in the sector. With property prices rising, stable lending conditions and a steady market make real estate a key driver of economic growth, boosting demand and contributing significantly to India’s economic progress.”
Analysing the possible impact on micro-markets in the Mumbai Metropolitan Region (MMR), Jitendra Mehta, President, CREDAI-MCHI Thane, said, “A reduction in repo rate would have helped boost housing sales momentum in Thane’s real estate scenario. At the same time, maintaining relatively affordable home loan interest rates will attract borrowers and this should see home buying in Thane get a positive impact. The reduction in CRR will have a positive impact is positive as banks will have higher lending capacity, with obvious benefits for the industry. Home seekers in Thane should buy their dream home and bring in the New Year in their own home, given that end-2024 sees the overall cost of a Thane home still relatively affordable.”
