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CREDAI welcomes RBI announcement to cut repo rate

The Confederation of Real Estate Developers’ Associations of India (CREDAI) the apex body for private real estate developers in India welcomed the move by RBI to reduce the repo rates by 25 bps to 7.5%, the second rate cut within a span of 50 days. This is a favorable shift in stance from the RBI in view of the controlled inflation projection and a favorable business environment.
Speaking on the development Mr. C Shekar Reddy National President CREDAI said,” Considering the overall economic situation and challenges being faced by the industry, we welcome the 2nd reduction in repo rates from January 2015, with the hope that it translates into lower rates for home loans, which will ease the burden on the home buyers and create a positive traction in demand for housing. However there is a need for larger cuts in the interest rates to facilitate reduction in EMI’s & increasing the eligibility of a common man to purchase a house. “
*Mr. Reddy further added* “Moreover, Priority sector lending (PSL) status awarded to the affordable housing segment by RBI last year, allowing banks to raise funds for affordable housing sector through long term bonds and increase the lending to this segment at lower rates of interest. However not much has been done by banks towards increasing the lending to Affordable housing segment. RBI and the government need to immediately work towards a mechanism and set specific targets for banks, ensuring increased lending to affordable housing projects and cheaper home loans. The critical issue that is hampering the growth of the affordable housing segment is the prevailing high interest rates that make housing unaffordable to the middle and lower middle class. It is here, that we demand the interest subvention to affordable housing by the private sector for the middle and the lower middle class to create momentum and achieve the “Mission Housing for all by 2022”.