Second Rate Cut By RBI, Realty Sector Likely To Grow

For the second time in this year, the Reserve Bank of India (RBI) has cut the repo rate by 25 basis points (bps) to 7.5 percent from 7.75 percent.The reverse repo rate accordingly, have been adjusted to 6.5 percent, while the cash-reserve ratio is kept unchanged at 4 percent by the central bank. It came as a huge surprise right after the budget was announced. However, for those who doesn’t know, the repo rate refers to that rate on which the commercial banks lend money from the central bank. And the cash reserve ratio is the total amount of net liabilities of the commercial banks, which they require to keep in cash.

Earlier in January this year, RBI has reduced the repo rate by 25 bps. This twice rate cut by RBI is most likely to bring ‘ache din’ for the real estate sector for both the developers as well as for the buyers. This step has indeed brought smiles on the face of the country’s drowning property sector with a hope of improvement in the prices and sales of the properties.

With this move RBI has clearly indicated that the institution is all set to improve the economy while curbing the inflation, which in turn will be helpful for the real estate sector. Projecting this rate cut as a right and positive move, the real estate industry is further looking for a cut in interest rates, which can help the common man to buy or invest in the property market with the reduced EMI mount that they have to pay.

Now the question arises, whether this rate cut will revive the home sales position or not? Because of the fact that the benefits of lowered interest rates are yet to pass on the to the customers, as the banks hasn’t reduced their rates. As soon as the banks will reduce the interest rates and transfer it to the customers, the real estate industry in India will get a boost in a huge way. With more spending power due to hassle free availability of loans, the realty sector along with the economy most likely will experience a rapid growth.

Yesh Developers is a leading developer of Residential Townships in Karnataka with a sustained focus on Mysore. A fast growing, dynamic and professionally managed company, Yesh caters to the specialized housing needs of its various customers groups, hence have been an integral contributor in development of properties in Mysore & residential sites in Mysore