In its MPC meeting, the Reserve Bank of India (RBI) opted to maintain the status quo on the repo rate, signalling a sense of stability in its monetary policy. Industry experts have hailed this decision as a boon for the housing market, emphasising its potential to anchor Equated Monthly Instalments (EMIs) for borrowers, thus fostering a conducive environment for home loan stability.
The RBI’s Monetary Policy Committee not only maintained the repo rate but also kept the standing deposit facility at 6.25 percent, while the marginal standing facility rate and the bank rate remain unchanged at 6.75 percent.
This move is poised to have a tangible impact on the housing sector, particularly in the realm of home loan interests. The decision to uphold the status quo by the RBI is anticipated to provide a slight respite for individuals navigating home loan EMIs.
This financial predictability is not only expected to bring relief to the existing homeowners but is also likely to be perceived positively by potential buyers, fostering an atmosphere of confidence within the real estate industry. As the ripples of this decision permeate the market, stakeholders can anticipate a more assured lending landscape, setting the stage for a stable trajectory in the housing finance sector.
Commenting on the RBI move, industry experts said the MPC decision will help the real estate sector, particularly the residential segment, to continue its growth path and convert fence sitters into homebuyers given the repo rate has remained unchanged since April.
Sankey Prasad, CMD, Colliers India, said, “This will eliminate any additional burden on homebuyers and will drive up the demand for housing in the near term on the expectations of a future rate hike. There is a significant demand for residential units across the country as housing has become the most important asset for households post the pandemic and this rate hold should come as a reminder to invest early on in this fast growing industry.”
Furthermore, the interest rates are still low at 9-9.5% on average as compared to August 2011 when it was hovering over 11%, making it the best time to invest before a future rate hike increases prices across the board.
“In addition to this, increase in input prices such as land, cement and labour cost along with an increase in borrowing cost is likely to lead to a spike in rates in the coming few quarters and, therefore, we expect a significant jump in demand in the short term,” added Prasad.
Adil Altaf, Director Sales & CRM, Whiteland Corporation, said, “In the heart of Delhi NCR’s real estate landscape, our commitment to excellence stands resolute as the RBI holds the repo rate steady at 6.5% for the fifth successive occasion. This unwavering economic stance provides a favorable backdrop for prospective homebuyers, reinforcing confidence in the stability of our property market. We embrace this continuity, ensuring our clients navigate a secure and promising path in their real estate ventures, backed by the enduring strength of a consistent monetary policy.”
“The RBI decided to maintain the repo rate, a measure that supports economic recovery and may encourage banks to offer good home loan rates to boost housing demand. This decision is expected to boost confidence among developers and homebuyers, allowing banks to offer better rates to boost housing demand. However, due to inflation, banks may be cautious in lowering rates too much. The stable borrowing rates will benefit potential homebuyers, fostering increased demand in the real estate sector,” said Santosh Agarwal, Executive Director and CFO, Alphacorp.
“The RBI decision to keep the repo rate constant at 6.5% aims to support economic recovery and encourage banks to offer better loan rates. This decision is expected to boost confidence among developers and buyers & investors, but banks may be cautious due to inflation. Stable borrowing rates benefit potential buyers and foster increased demand in the real estate sector, especially during the festive season when the property market typically experiences a surge in demand,” said Vipin Sharma, Chairman, Aarize Group.