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reserve Bank of India On Wednesday announced the increase in the repo rate for the sixth consecutive time. RBI has increased the repo rate by 0.25% to 6.50%. Let us tell you that the policy interest rate (Repo Rate) has been increased by 2.5% in the 6th consecutive monetary policy. Due to this, all types of loans including home, car loans have become costlier. Once again the increase in the interest rate will make all types of loans costlier. The biggest impact of this will be on the home loan borrower as the loan amount is huge. Due to this the EMI burden will increase. Reacting to this, real estate sector experts and developers say that this will spoil the sentiment of the property market and will work to reduce the demand for homes. Let us take a look at what the realty sector has to say on the interest rate hike.
There can be a bad effect on the demand for houses.
Antriksh India CMD Rakesh Yadav The 0.25% increase in RBI’s repo rate will make home loans costlier. This will definitely work to increase the burden on the home buyers. EMI will increase due to cost of home loan. Increasing the repo rate by RBI will make bank loans costlier. Due to this, higher housing loan rates will affect the sentiments of home buyers. This will affect the demand for houses. In the coming times, the enthusiasm to buy a house may decrease. Its biggest impact will be seen on the demand for affordable homes. There will not be much impact on the luxury and mid housing segment. Demand may be affected for some time. However, demand for homes is expected to remain robust in the long term.
The effect of expensive loans will be seen on the property market
Manoj Gaur, President CREDAI NCR and CMD, Gaur Group The repo-rate hike of 25 bps was expected since the US Fed rate hike a few days back. The previous hike didn’t have much impact but this hike may start impacting the sector. With no major push for the real estate sector in the Union Budget and low inflation forecast, the RBI could have deferred the hike. However, we expect the impact to be lower due to higher market sentiment.
The increase will increase the burden on the middle-income group
Rajesh K., Managing Director, Exom Landbase Pvt. Saraf The RBI’s small increase in repo rates by 25 basis points was widely anticipated, and organizations handled it properly, avoiding any significant change in aggregate value, it said. Homebuyers in the mid-income bracket or affordable category may face a slight headwind, but the overall expansion of the industry will remain unaffected. As per the recent trends, the real estate sector is doing very well and this decision of the government will help it to grow further. Though the interest rate of 6.50% will put a little burden on the home buyers, but this measure will strengthen the economy. We hope that this increase does not create a significant difference between builders and buyers.
Will affect the demand for affordable housing
real estate sector organizations Dr. Niranjan Hiranandani, Vice President, NAREDCO Said that the repo rate has been increased by 250 basis points from May 2021 onwards. This has made home loans costlier. This will adversely affect the demand for affordable housing. Will hit vulnerable homebuyers looking to buy cheap homes and reduce the supply of developers. There will not be much impact on the luxury and mid housing segment.
There itself, Pradeep Agarwal, Founder and Chairman, Signature Global (India) Said that the 25 basis points increase in repo rate has been done by RBI to contain inflation due to geo-political uncertainties. Its effect will not be seen much on the demand of the house. Given the growth-oriented budget announced by the government earlier this month, coupled with positive market sentiments, it is clear that affordable and mid-class housing is witnessing a significant increase in demand, he added. In the coming months, the demand for housing will see a growth of at least 20 percent on a quarterly basis and 30 percent on an overall YOY basis.
No stimulus in budget, increase in repo rate
Ashwani Kumar, Director, Pyramid Infratech said that the RBI has taken the step of taking it to 6.50% by announcing a minimum increase of 25 bps in the repo rate. This increase is a bit disappointing as no major push was given to the real estate sector in the Union Budget, but the market trends are expected to increase the popularity of the projects. The continuous increase in the repo rate has led to an increase in home loan interest rates. However, keeping the real estate sector stable, buyers have been inclined towards residential and commercial projects. The RBI is trying to balance global inflation with repo rates, and is expected to stop hiking anytime in the future.
try to reduce inflation
Kushagra Ansal, Director, Ansal Housing Said that in an effort to control inflation, the RBI has announced an increase in repo rates by another 25 basis points. This was generally expected, and RBI has managed it excellently by implementing only minor modifications. Narayan Bhadana, Managing Director, 4S Developers, said that in an effort to bring down inflation, the RBI has announced an increase in the repo rate by 25 basis points. The increase in repo rate from 6.25% to 6.50% is quite small and can be easily discounted as it is still much less compared to other parts of the world facing the same situation. The hike was widely anticipated, and the RBI has handled it admirably by making only slight adjustments. This may have a short-term impact on homebuyers, but will have favorable long-term benefits. The real estate sector is performing well as a result of high demand for Grade A developments, and this trend is expected to continue.
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