Here’s some good news for homebuyers looking to buy a home availing a home loan.
The reason being that the RBI today announced that the Repo Rate shall remain unchanged.
In June the RBI had increased the Repo rate from 6.25 to 6.5 a .25 basis point increase.
However, on Thursday the RBI announced that Repo rate shall be 6.5 which means no hike.
What does this mean for a homebuyer? Higher the Repo rate, higher the lending interest, so when the Repo rate is stable the interest rates are also expected to be stable.
Here’s what industry experts got to say on this.
National Vice Chairman of NAREDCO, Dr. Niranjan Hiranandani, said, “RBI’s pause in rate hikes over the past few quarters will certainly drive up real estate growth. With stronger domestic consumption and NRI demand, the upcoming festive tailwinds are expected to create demand traction in the ownership and built-to-rent housing segments. In recent years, corporate balance sheets have improved due to ample liquidity, market consolidation, alternative funding avenues, and heavy debt servicing. Consequently, the market is experiencing a supply catch-up to meet the soaring demand for mid-priced and luxury housing, while the weakening demand for affordable housing represents a spoiler alert. I believe the Indian commercial segment is attractive to global players due to its cost effectiveness and availability of skilled talent. A sustained economic expansion has led to a rise in the demand for office spaces, organized retail spaces, and warehouses in Indian commercial real estate. There is, however, a possibility that tenants will consolidate and reorganize offices as flex workspaces become more popular. Real GDP growth pegged at 6.5% for FY 23–24 is in anticipation of the Indian economy’s resilience to withstand geo-political upheaval due to global realignment. India is enjoying its goldilocks moment as economic activities rebound, with an uptick in private and public capex, enhanced capacity utilization, robust domestic demand, and favorable demographic dividends.”
Boman Irani, President, CREDAI, said, “RBI’s stance of maintaining the repo rate at 6.5% is a cautious step towards further controlling inflation in the long run. With the economy on track & driven by sustained demand across sectors, we at CREDAI reiterate our view that it will be beneficial for consumer sentiment if a repo rate cut is announced in the next MPC review. This will increase consumer spending in the festive season & fuel demand across sectors, boosting our Indian growth story.”
Manju Yagnik, Vice Chairperson of Nahar Group and Senior VP, NAREDCO, Maharashtra, said, “The RBI’s announcement today provides additional relief to borrowers of home loans who are dealing with higher loan EMIs and longer loan terms as a result of a prior rate hikes. Since loan tenures cannot be extended beyond the borrower’s retirement age, the only option lenders have is to raise EMIs, which may not be viable for many borrowers. Lowering their debt burden should be the primary concern for borrowers at this point. Refinancing to a lower rate can directly help tackle this issue. A lower interest rate can reduce loan terms’ lengthening while saving borrowers some of their hard-earned money. The borrowers can again thank the RBI for their decision. Additionally, to lessen their debt load, borrowers may think about voluntarily raising their EMIs or prepaying 5% of their loan sum each year.”
Anuj Puri, Chairman – ANAROCK Group, said, “As widely anticipated, the RBI has decided to keep the repo rates unchanged at 6.5%. India continues to outperform other countries in terms of consumption and with the festive season coming up, the RBI will not risk denting it. This is nothing but good news for aspiring homebuyers on the market for a purchase in the near future. The unchanged repo rate will help maintain the momentum in housing sales – particularly in the mid and luxury segments, which did significantly well in H1 2023. As per ANAROCK Research, we saw total housing sales of approx. 2.29 lakh units across the top 7 cities in H1 2023, the highest half yearly sales in the last decade. However, the risk of inflation continues to lurk and if it rises further, there could be some repercussions on overall sales, especially in the cost-sensitive affordable housing segment which has already been severely impacted by the pandemic over the last couple of years. Amidst the rising cost of these properties and the cumulative 250 bps rate hikes by the RBI in the last one year and more, affordable housing buyers have taken the severest blow. As per ANAROCK Research, homebuyers’ EMIs jumped up by 20% in the last two years. Home loan borrowers who were paying an EMI of approx. INR 22,700 in July 2021 are now paying approx. INR 27,300 – an increase of approx. INR 4,600 per month. This 20% increase in the EMI has resulted in a jump of approx. INR 11 lakh in the overall interest component – from approx. INR 24.5 lakh interest payable in 2021 to approx. INR 35.5 lakh today. The total interest payable over a 20-year tenure is now more than the principal amount.”
Dr. Samantak Das, Chief Economist and Executive Director, Research, JLL India, said, “The decision to maintain the policy rate unchanged at 6.50% displays the steadfast and vigilant stance of the monetary policy committee. The focus on withdrawal of accommodation is likely to continue with stickiness in inflationary pressure due to expectation of a sub-normal to normal monsoon. While the current vegetable price growth is expected to bring headline inflation above the tolerance band, a likely reversion to mean of the same and a long-term view of balancing growth amidst this temporary inflation rise kept RBI in status quo mode. This third pause in policy rates continues to remain as positive news for the real estate sector with the residential segment carrying forward its growth momentum through successive quarters. Residential sales during H1 2023 grew by 21% y-o-y, yet another period of high growth. It is interesting to observe that residential sales have consistently reached new peaks in each successive quarter over the past year. While home prices have also risen by 8-15% over the last twelve months, this increase is likely to be kept in balance by the countervailing forces of the unchanged policy rates. With interest rates holding steady, affordability synergies will continue to persist and thus support the homebuyer momentum and residential sales during the coming quarters.”
Sandeep Runwal, President, NAREDCO Maharashtra, said, “The decision by the RBI to maintain the repo rates at 6.50 percent is a favorable step, though a decrease in these rates would have positively impacted the optimism of potential homebuyers resulting in stimulated home sales. An adjustment like that would have injected more funds into the pockets of prospective homebuyers, motivating them to make their dream home purchase. Nevertheless, the RBI has effectively managed to keep inflation rates within acceptable boundaries. The Indian economy has displayed resilience against global uncertainties and has exhibited commendable performance. Also, the government has implemented a range of constructive policy measures that have sustained housing sales momentum. Additionally, the government’s resolution to keep the Ready Reckoner (RR) rates steady for the state in 2023-24, has indeed elevated the confidence of homebuyers. We once again make an appeal to the government to consider reducing stamp duty rates, a move that could invigorate the interest of potential homebuyers. It is our hope that these positive advancements will uphold the enthusiasm of homebuyers, encouraging them to step forward and realize their homeownership aspirations.”
Pritam Chivukula – Vice President, CREDAI-MCHI and Co-Founder & Director, Tridhaatu Realty, said, “The RBI’s decision to keep the repo rate unchanged at 6.50 per cent, once again reiterates the government’s resolve in supporting the real estate industry with sustaining government policies. This pause in the repo rate will help in improving market sentiments which is essential, given the upcoming festive season. This will drive housing demand, while controlling inflationary trends. We expect the government to continue with industry friendly policies that will sustain housing sales. We also look forward to the state government reducing stamp duty which will further bring relief to home buyers and boost home sales.”
Samyak Jain – Director, Siddha Group, said,
“The RBI’s choice to keep its key policy rates unchanged for the third consecutive occasion was anticipated. This decision arrives amidst escalating property prices, which is already adding a huge financial burden to the end consumer. Although the decision might not have an immediate impact on the prospective homeowners, but it does offer some stability to the real estate sector. Consequently, it could potentially motivate several homebuyers who were actively in pursuit of their dream home. We eagerly anticipate governmental involvement, possibly through the reduction of stamp duty rates, which would offer relief to homebuyers and alleviate their financial strain even more.”
Dharmendra Raichura VP Finance at Ashar Group said, “We welcome the RBI’s decision to keep the repo rate unchanged. The Market expects that RBI will likely keep unchanged RERO rates throughout 2023. The Q2FY inflation could be around 6% against the RBI Forecast of 5.2%. This is due to a sharp increase in foodstuff prices. However, this looks like the temporary nature of the price rise in the foodstuff and may not affect the core inflation long-term. And therefore, the core inflation can remain steady until March 2024 at 5.1%. There is ample liquidity in the system, which is very positive for the banking system. In the future monetary policy, we are hopeful that RBI will take into account lowering the REPO rates, which would greatly ease home purchasers and the real estate sector.”
Sanjay Dutt, MD & CEO, Tata Realty & Infrastructure ltd said, “RBI’s decision to keep the repo rate unchanged at 6.5% shows their commitment to maintaining stability in this intricate market dynamics and ensuring favourable Indian economic growth. Taking note of the homebuyer sentiment towards the economy, this move will help in sustaining the demand for luxury residential properties while encouraging potential buyers to invest in their dream homes. Consequently, it also provides an opportune time for individuals to avail housing loans at attractive interest rates, resulting in a higher credit flow to the housing sector. Overall, this decision reassures the investors and stakeholders in potentially attracting more investments into the industry.”
Also Read: CREDAI Urges RBI to Maintain Repo Rate amid Increasing Construction Costs and Rising Housing Prices
