Home loan rate cut to boost housing

The recent reduction in  key policy rates by 25 bps  to 6 percent from 6.25 percent to 6 percent  may well help reduce the EMI burden on home seekers, in turn giving a much needed push to home sales.

This is the second rate cut by the Reserve Bank of India this year. In February RBI had effected a 25 bps rate cut.Going forward, RBI has indicated for more rate cuts this year. Since the banks have not been effectively passing on rate cuts to lenders due to mismatch in the growth of bank deposits and bank lending, RBI governor has said that it will soon come out with norms for rate cut transmission. And for that RBI has already been boosting liquidity of banks.

Says Praddeep Aggarwal, Chairman, Assocham National Council on Real Estate, Housing & Urban Development and Founder & Chairman of Signature Global Private Limited, ” The second consecutive rate cut by the Monetary Policy Committee of RBI is a positive development, especially when residential real estate is still struggling to boost sales. Coming close on the heels of steep cut in GST rates for both standard housing and affordable housing, this twin measure will provide much needed impetus to housing. And going forward, once the mechanism to transmit rate cuts is put in place by the RBI, this boost will be much more pronounced”.

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