RBI’s new repo rate cut to boost affordable housing demand

The latest 40 bps cut in repo and reverse repo rate by the RBI will help push demand for affordable housing.

RBI has announced 40 bps cut in repo rate to 4 percent and 40 bps cut in reverse repo rate to 3.5%. This is in continuation of government policies to build liquidity and enhance its circulation in the system. This is meant to cushion the adverse impact of Covid-19 on liquidity.This is meant to discourage banks to park their additional funds with RBI. It will in turn improve monetary transmission and reduce the EMI burden on home buyers.

Says Mr. Pradeep Aggarwal, Founder and Chairman, Signature Global & Chairman – ASSOCHAM, National Council on Real Estate, Housing and Urban Development, “This is a positive development for the residential property market. It will enhance rate cut transmission, reduce EMI and encourage homebuyers to borrow more. Affordable housing will benefit most from it as buyers of this segment are EMI- sensitive.

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