Why RBI’s latest liquidity is a big win for boost homebuilders – CNBC TV18

The Reserve Bank of India (RBI) has increased its efforts to remove liquidity concerns, announcing that it will double the size of its open market operation (OMO) for February 13 to ₹ 40,000 crore – Increase from ₹ 20,000 already declared. This step follows the decision of RBI’s decision to cut the repo rate in 25 basis points, marking the first rate reduction in five years. According to the global rating agency Fitch, these measures are expected to make home loans more inexpensive by these measures, with a direct impact on the same monthly installments (EMIs).

The core of these changes is a decrease in net interest margin (NIM), which refers to the difference between the interests earned by banks on loans and the difference between the interest paid on deposits. As the cost of lending is low, home loan rates are likely to follow the suit, resulting in low EMI for homebuilders.

Fitch rating stated that homebugars will see the immediate benefits of these changes: “Immediate effect (of the decline in NIM) will be felt on the floating loans associated with the outer benchmark, such as housing and SME loans, but also felt through fresh debt in one Will be done. Fall in policy rate environment. ,

Industry experts have given their support for these measures. Harshvardhan Neotia, president of the real estate Major Ambuja Neotia Group, said that the liquidity will make the infusion credit more accessible, which will benefit consumers and businesses from the cost of low borrowing. This, in turn, is expected to encourage demand in the housing market.

Read: Common Housing says that 80% of borrowers will benefit from RBI rate cuts

The Real Estate Association CREDAI Hyderabad stated that the rate cuts would provide significant relief to the borrowers, especially homebuair for the first time. “In combination with recent tax relief measures, this policy change creates a positive environment to increase housing demand and launch the new project,” the association said.

RBI’s action is part of a comprehensive strategy to promote economic development, including increasing the strength in the housing sector. With the possibility of low EMI due to low NIMs, the purchasing power of homebuilders is determined to increase. Along with this, the tax relief measures of the Union Budget increased the approach to the housing market.