RBI Rate Cuts to Spur Mid-Income Housing Demand, Says CREDAI Tamil Nadu

Reserve Bank of India (RBI) recent repo rate cut has come as a morale booster to the real estate sector, with CREDAI Tamil Nadu now anticipating an increase in demand for affordable and mid-income housing.

WS Habib, president of CREDAI Tamil Nadu, stated the RBI’s move to cut the repo rate to 5.5% and Cash Reserve Ratio (CRR) to 3% would lower the cost of lending and enhance the supply of credit to the industry. “It is a welcome move that would decrease home loan rates of interest and increase affordability for low-cost and mid-income buyers,” he added.

The Confederation of Real Estate Developers’ Associations of India (CREDAI) Tamil Nadu feels this step could be a tipping point to inject economic activity and rekindle buyer sentiment, especially in the housing segment.

Habib, however, stressed that the success of the policy depends on how quickly banks pass on the benefit to consumers. “We strongly urge banks to promptly realign their lending rates in line with the RBI’s reduction. The timely transmission of rate cuts is essential to translate this policy move into real growth on the ground,” he said.

The RBI’s move to ease monetary policy follows a general attempt to spur consumption and investment, with sectors such as real estate still suffering from high building prices and risk-averse purchasing habits.

CREDAI Tamil Nadu expects subdued home loan rates to not just drive up demand but also push more first-time buyers into the market. The affordable and mid-income segments two of the growth drivers for the industry are expected to be most benefited by this monetary policy move.

Real estate developers are optimistic that with softer credit and lower EMIs, fence-sitters will make the jump, giving the residential property segment much-needed impulse.