Experts ask RBI to cut interest rate to revive real estate market, ease home loan burden

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Subscribe to enjoy similar stories. With the Reserve Bank of India keeping its key interest rate unchanged, real estate experts and developers have stressed the need to lower the rate, citing the need to stimulate sluggish sales and ease the growing burden of borrowing costs. “At this point, a rate cut would be more beneficial for consumers," said Shishir Baijal, chairman and managing director of real estate consultant Knight Frank India.

“Growth in home loans has slowed and consumption among lower-income groups has significantly decreased, as witnessed in the sharp moderation in sales of affordable housing." “Industry concerns regarding affordable housing are sounding a loud alarm. A long-overdue rate cut is deemed essential to sustain steady economic and real estate growth, imperative for maintaining India's fastest-growing GDP status," said Niranjan Hiranandani, a Mumbai-based developer and chairman of the National Real Estate Development Council. The RBI kept its key repo rate unchanged at 6.5% on Friday to check inflation and cut its estimate for GDP growth in FY25 to 6.6% from 7.2%.

However, the RBI’s Monetary Policy Committee slashed the cash reserve ratio by 50 basis points to 4%, reducing the amount of reserves that banks have to maintain with the central bank. Housing sales declined in the July-September quarter as prices increased. Residential sales fell 11% from a year earlier and new launches dropped 19%, according to ANAROCK Research.