Banks are finally hearing Raghuram Rajan’s plea! Cheap homes finally a reality

The ongoing slump in the real estate market may soon be a thing of the past as banks like ICICI, State Bank of India, HDFC, etc have cut rates, after the RBI also reduced repo rate by 50 basis points.

As the lenders lowered the rates, real estate experts said this would fuel the demand and will in turn also push government’s plan of affordable housing and smart cities.

READ ALSO: Axis Bank reduces its base rate by 35 basis points to 9.50%

The rate reductions by banks are between 15 basis points and 35 bps. SBI is now giving home loans at 9.55%, whereas HDFC is offering them at 9.65%. Meanwhile, ICICI Bank also followed suit and lowered rates to 9.65% a year for loans up to Rs 5 crore for salaried professionals.

For females, the loans will be 5 bps cheaper.

"This is the trigger the market has been eagerly waiting for. We have already started seeing fresh interest from buyers. Many realtors in Mumbai have started rationalising prices. Companies that understand the right price and right location will see growth momentum,” said Sandeep Ahuja, chief executive of Mumbai-based Richa Realtors.

Earlier, the RBI’s high rate policy had kept people away from buying property.

In real estate sector, the volume dropped by 19% in H1 2015 compared to H1 2014.

Realty industry contributes 6-7% to GDP and any movement is going to help the entire economy.

(Image: Thinkstock)