RBI's Rate Cut: A Boost for Housing Demand?

CREDAI, a leading real estate body, welcomes the RBI's recent 25 basis points rate cut but urges further reductions for stronger housing demand impact. Analysts highlight that while interest rates may lower, their effect hinges on banks passing benefits to consumers, especially in mid-income housing.

The apex real estate body, CREDAI, has expressed cautious optimism following the Reserve Bank of India's decision to slash the benchmark lending rate by 25 basis points. While acknowledging that the move could yield a limited direct impact, CREDAI emphasized the need for further cuts to stimulate housing demand.

The reduction in the repo rate is expected to potentially lower home loan interest rates, contingent on banks passing on these benefits to consumers. CREDAI National President Boman Irani noted that this monetary policy supplements Budget measures aimed at economic growth, despite recent substantial liquidity boosts from a previous Cash Reserve Ratio reduction.

Naredco Chairman Niranjan Hiranandani echoed calls for more rate cuts, highlighting how lower interest rates, combined with tax benefits, could accelerate home purchases, particularly in mid-income housing. With inflation pressures persisting, all eyes are on the RBI's next steps under Governor Sanjay Malhotra.