CREDAI Chennai Welcomes Repo Rate Cut Announcement by RBI

The RBI Repo rate cut is a very positive outlook because a lot of economic pointers are performing well, and this is the time, India will have to grow and evolve as a superpower. The market dynamics are good, and an ease in the repo rate to the extent of 50 bps is a welcome move, because we've been on the high-interest rate regime for quite a long period.

Nearly after two years, there was a token 25 bps cut in February, followed by another 25-bps reduction. However, those adjustments did not yield the desired impact on economic growth. In fact, many banks and financial institutions had not fully passed on the previous 50 bps reduction. Therefore, this current rate cut was much needed. In addition, the reduction in the CRR during festive season, will also benefit the retail real estate.

Following Repo rate cuts, the EMI for Rs.1 Crore home loan, for 20 years, is now cheaper by approximately Rs.3,000. It’s a substantial savings for home loan borrowers and is likely to stimulate greater economic activity, particularly in the residential real estate market, which may see an immediate impact.

Additionally, The Reserve Bank has raised the loan-to-value (LTV) ratio for lending against gold to 85% for loans under ₹2.5 lakh from the present 75%. This move is expected to make it easier for the mid income segment to invest, especially in real estate.