Realty players seek below 9 pc interest rates for home loans

CREDAI, the apex body of property developers, has expressed disappointment over the RBI’s decision to keep key policy rates unchanged and demanded that interest rates on home loans should be brought down to below 9 per cent to boost housing demand.

“We are very disappointed. We were expecting a 25 basis points reduction in the repo rate,” CREDAI President Getamber Anand said. He said the interest rates on home loans should be lower than 9 per cent.

Reserve Bank Governor Raghuram Rajan left the key interest rate unchanged earlier in the week citing inflation risks and growth concerns, while pegging further easing of monetary policy on government’s budget proposals.

Property consultant Knight Frank India CMD Shishir Baijal, said, “As an industry, we are disappointed. The real estate industry is going through very tough times and needs a fillip in both lowering the cost of funds and increasing liquidity.”

The only hope now is that the banks transmit more of the 125 basis points policy rate cut in the last one year at the earliest to the end-consumers, he added.

“With the Union Budget coming up, I hope some sops will be announced that will give this stressed sector the much-needed impetus to see a turnaround,” Baijal said.

FDI-funded realty firm SARE Homes MD David Walker said, “We are expecting that the government would take considerate steps closer to the budget and provide further rate cuts to channelize economic growth.”

“The government needs to steer focus towards bringing about reforms and a policy makeover to revive the ailing sector,” he added.

Mahindra Lifespaces VP Marketing Smeeta Neogi said, “A fall in repo rates may have resulted in home loan interest rates moving downwards and thereby driving a positive home buying sentiment in a muted real estate market.”

Exhorting the RBI and the Finance Minister to ensure that the benefits of rate cuts are passed on to the customers by banks Amit Modi, Director ABA Corp and Vice President CREDAI Western UP, said, “While RBI has taken steps to considerably reduce rates, the interest rate transition from banks to the consumers has been gradual. Across the year, the total of 125 bps cut in the rates has been already done and now much depends on how banks transmit the benefit to home buyers. Finance Ministry as well as the RBI should push the banks to transfer the benefits to the end consumer, else these moves will stop short of benefiting the consumer and only help in buffering the bottom lines of the bank.”