Image Source : PIXABAY The move is expected to benefit homebuyers.
As expected, the Reserve Bank of India’s new Governor Sanjay Malhotra announced a 25 basis point rate cut to 6.25 per cent from 6.50 per cent. This is the central bank’s first interest rate cut in nearly five years. The last rate cut was in May 2020.
Home loans to get cheaper
The move is expected to lower home loan interest rates and benefit homebuyers.
How does it impact EMIs?
Let’s understand this with an example. Suppose you took a home loan of Rs 50 lakh at an interest rate of 8.75 per cent for 00 years. With this decision, it is expected to come down to 8.50.
EMI per month with 8.75% interest rate – 39,335
EMI per month with 8.50% interest rate – 38,446
So the total saving per month would be – Rs 889
This means it is an ideal time to explore home loan options for new buyers. Existing buyers should check with their banks whether they have passed on the rate cut benefits or not. If not, you can consider refinancing your loan with another bank offering lower interest rates.
Here’s what experts say
Commenting on the RBI move, Manju Yagnik, vice chairperson of Nahar Group and senior vice president of NAREDCO – Maharashtra, said that lower home loan interest rates will provide much-needed relief to homebuyers, making property purchases more affordable by reducing EMIs.
“This rate cut is a much-needed push that will help both homebuyers and developers while driving positive momentum in real estate,” he said.
Yashank Wason, managing director of Royal Green Realty, said that the move will be beneficial to refinance existing home loans.
“The rate cut will benefit homebuyers, since there will be a reduction in interest rates on home loans, leading to affordability. Loan EMIs will also reduce, which will be beneficial to refinance existing home loans,” he added
“This move is expected to have a positive impact on the real estate sector, particularly for first time homebuyers. With lower home loan interest rates, our homebuyers will find housing more affordable, especially in the mid and premium segments,” said Dharmendra Raichura – VP and head of finance at Ashar Group.
Mohit Agarwal, business head, Conscient Infrastructure, said the rate cut, coupled with the MPC’s neutral stance, signals stability, encouraging HNIs and NRIs to make strategic investments.
“The RBI’s decision to cut the repo rate by 25 bps to 6.25% is a welcome move for the premium real estate segment. After 11 consecutive rate holds, this reduction is expected to provide a much-needed boost to housing demand by making home loans more affordable. Lower borrowing costs will enhance affordability for luxury homebuyers and investors, boosting demand in high-end residential markets,” he said.
Santosh Agarwal, CFO & executive director of Alphacorp, said, the move will enhance affordability for homebuyers.
“This move will stimulate both residential and commercial investments, as businesses gain easier access to financing for expansion. With this rate cut, we anticipate stronger demand, improved cash flows, and greater investment activity, further reinforcing real estate’s role as a key driver of economic growth,” he added.
According to Rajjath Goel, Managing Director, MRG Group, the RBI’s decision to cut the repo rate by 25 bps comes as a timely boost for the real estate sector. Lower interest rates translate to more favorable financing options, even for high-ticket properties. Combined with the increased disposable income from recent tax reforms in the Budget, this is an opportune moment for the sector, and we expect a sustained growth in sales this year.
