Good news for Homebuyers! In a major decision, the Reserve Bank of India has finally cut down the Repo rate by 25 basis points to 6.25 percent. The reduction was announced by RBI’s monetary policy committee (MPC) which was headed by newly appointed Governor Shaktikanta Das. The last cut took place in August 2017.
After following its strict ‘calibrated tightening’ policy from last 17 months, the RBI has shifted towards ‘neutral’ stance.
Speaking on this policy change, Shaktikanta Das said that the shift will provide flexibility to meet growth challenges.
Welcoming the move, Piyush Goyal Interim Finance Minister tweeted, “RBI’s decision to reduce the repo rate by 25 basis point from 6.5% to 6.25% and change of stance to ‘Neutral’ will give a boost to the economy, lead to affordable credit for small businesses, homebuyers etc. and further boost employment opportunities.”
Several other economists and financial analyst also welcomed this move by the RBI.
Lowering of Home Loan EMIs
The rate cut has also brought a wave of happiness among many loan borrowers as this reduction will eventually lead to lowering down of home loan EMIs. This will also reduce the monetary burden on them and will further strengthen their purchasing power which will, in turn, create a positive impact on the real estate sector too.
The benefit of this reduced repo rate will soon reach to the loan borrowers through their respective banks who will now reduce their marginal cost of funds based lending rates i.e. MCLR. For those who are new to this term, it means the minimum interest rate that a bank charges on the loan.
The real estate sector who is already rejoicing the budget announcements is now more excited to hear the same. Lessening of Home loan EMIs means more profit for new home buyers who are looking to invest in a new property as well as for developers who want to surpass their last year’s housing sales record.