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

The post Good News for Homebuyers availing a Home Loan appeared first on Square Feat India.

With no change in the Repo Rate the banks won’t be impacted adversely, the lending process is expected to be not impacted too. Here’s why it is a good news for homebuyers, especially those who seek to buy a home availaing a Home Loan Interest.

Dr Niranjan Hiranandani -National Vice Chairman -NAREDCO stated that, “India Inc hails accommodative stance of RBI with recurrent pause in repo rate hike at 6.50% as record high inflation eases off gradually. As a snowball effect, respite in homeloan interest rate will augur well to fuel uptick in housing sales across the segments. Now, the discerning homebuyers should avail the benefits of cooling inflation, stable home loan rates, conducive real estate market dynamics in the backdrop of buoyancy in GDP growth, domestic demand and availability of sufficient liquidity. With the festive season in tailwinds, a hiatus in interest rate hike will act as a growth catalyst and boost sales velocity. Notedly, rise in purchasing powers of Indian consumers as they tap into an alternative income avenue through capital markets, hike in salaries, job opportunities, gains in rental income are acting as funding streams for the homebuyers to buy residential assets. The supply of new housing stock is in tandem to the uptick in housing demand across property markets. Indian homebuyers are highly skewed towards luxury lifestyle as we witness rise in emerging first-gen millionaires, due to startup boost and enhanced business capacity utilization. This phenomenon prompts new homebuyers to take the plunge and secure the ownership home on the grounds of social security and stability.The stability reflected in rupee currency compared to others amidst geo-political storming has enabled India to retain its tag of fastest growing economy. Going forward, Industry anticipates a fall in interest rates as the Government and regulatory apex body re-orients their focus on GDP growth barometer.”

Dharmendra Raichura VP Finance at Ashar Group said, ”We are pleased that the RBI has decided to maintain REPO rates unchanged. Considering that inflation appears manageable, the Market expects that RBI will likely keep unchanged RERO rates throughout 2023. Recently we saw GDP numbers come out, which says Q4 GDP growth of 6.1% beats estimates, and overall FY23 growth at 7.2%. These factors indicate that the Indian economy is stable and doing well. Homebuyers would be much relieved by this decision because the market has been steady following a period of instability. There is a growing demand for real estate, and buyers want to buy properties from reputable developers. We are optimistic that RBI will consider reducing the REPO rates in the upcoming monetary policy, which will great relieve the Home buyers and the Real estate industry.”

Anuj Puri, Chairman – ANAROCK Group, said, “As was anticipated, the RBI has decided to keep the repo rates unchanged at 6.5%. This gives some respite to prospective homebuyers looking to avail of home loans in the near future. The unchanged repo rate can help maintain the momentum in housing sales, which has so far been firing on all cylinders in 2023. As per ANAROCK Research, we saw housing sales in first quarter of 2023 scale new heights, breaching the one lakh mark at 1.14 lakh units across the top 7 cities. Given the current unchanged rates, the outlook for those looking to buy their first home via a home loan soon remains favourable. Interest rates from most banks will continue in single digits. With top banks, they currently hover between 8.7 to 9.65%. A future rate hike, if any, may push the rates into double digits. The persisting financial instabilities in advanced economies of the world may have repercussions in India, causing the RBI to take such a step to face these headwinds.”

Manju Yagnik, Vice Chairperson of Nahar Group and Senior Vice President of NAREDCO- Maharashtra, said, “Regarding the latest RBI Monetary Policy statement, it was mentioned that the real estate sector was given a much-needed break by the RBI’s decision to maintain the repo rate constant. This choice would claim the same EMIs while bringing stability to the home loan category. It will keep the real estate market in a buying mood and could increase the mid-segment housing market. We also anticipate no change in the demand for upscale and exclusive dwellings. Despite the good effects of this choice, the governor of the RBI has indicated that this action may only offer short-term solace and may be required to stop the nation’s inflationary trend. This decision of keeping the rates unchanged will enable the real estate sector to consistently grow.”

Atul Banshal, Director-Finance, Omaxe Ltd, said, “We welcome the RBI’s decision to maintain the status quo on key policy interest rates. As anticipated, the RBI has displayed a growth-supportive policy stance.However, following a series of successive policy rate hikes, the real estate sector had anticipated some relief from the central bank in the form of a modest rate cut. Such a move would have bolstered demand and, subsequently, the overall economy. Consequently, we maintain our expectation that the RBI will opt for a policy rate reduction in the next review meeting, providing a much-needed impetus to various sectors, including real estate, and fostering economic growth.”

Vimal Nadar, Head of Research at Colliers India said, “Indian economy stands out strong amidst weakening global economic growth, at an estimated 6.5% for the year 2023-24. Headline inflation continues to lower, but still poses upside risks on back of volatile global conditions. RBII’s unabated commitment towards ‘withdrawal of accommodation’ is on expected lines and essential in the current uncertain global economic environment, marred with tight financial conditions, elevated inflation & geopolitical tensions. RBI’s move to keep the repo rate unchanged at 6.5% reinforces the Central Banks’s effort to support domestic growth and creating a conducive lending ecosystem. The latest inflation at 4.7% is encouraging, however needs to be aligned with other high-frequency indicators to buoy growth in a sustainable manner. As home loan rates are already at elevated levels of 9% and above, this is a significant breather for lenders, developers & homebuyers. First time homebuyers will be better placed to make their home buying decision in a stable lending rate regime. Fence sitters in the affordable & mid segment will have greater visibility of their EMIs & thus effect buying.”

Amit Goyal, Managing Director, India Sotheby’s International Realty, said, “In line with expectations, the Reserve Bank of India (RBI) has maintained the policy rate at 6.5% for the second consecutive time, following a series of six consecutive rate hikes. The RBI’s decision reflects their cautious approach in light of the persistent inflationary pressures and their potential impact on domestic consumption growth.However, the positive aspect is that the pause in rate hikes will instil a sense of optimism among borrowers and we expect the housing sales momentum to continue.”

Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd, “We appreciate the change in policy approach by the apex bank and decision to maintain the policy rate, instead of voting for another increase. This demonstrates a positive intent towards supporting the housing market and benefiting homebuyers. Home loan borrowers have embraced the previous interest rate hikes, and as long as the home loan interest rates hover around 9% per annum, it is unlikely to have a significant impact on housing demand.”

Also Read: CREDAI Urges RBI to Maintain Repo Rate amid Increasing Construction Costs and Rising Housing Prices

The post Home Loan Interest to stay in Single Digit appeared first on Square Feat India.

For those unaware let me tell you, that home loans are directly connected with repo rate the higher the repo rate, the higher the interest on your loan.

Let’s have a look at what real estate industry experts have to say on the repo rate being unchanged.

“In contrast to the World Bank, India Inc. applauds the RBI’s decision to pause the rate hike cycle. This act of relief will restore confidence in homebuyers’ sentiment and boost demand rally in the real estate. The industry body now calls for fiscal intervention from the Government of India to cool the inflationary heat caused by persistent geopolitical turbulence caused by the collapse of foreign banks, supply chain challenges, and global financial instability. Additionally, devising innovative flexi or step-up EMI schemes by the banks and FIIS will be conducive for the market players to onboard new home buyers in the high interest rate regime.”
Dr Niranjan Hiranandani, Vice Chairman , NAREDCO National

“We laud the RBI for maintaining the repo rate, in a move that is bound to go a long way in sustaining the sales momentum that we’ve witnessed in the residential segment. Given the potential adverse impact of a hike in repo rate and its ripple effect on both Housing demand and supply, we, at CREDAI, are extremely pleased and welcome the central bank’s decision. This move would provide a further boost for the affordable and mid income housing segments, in particular. Coupled with the Central Government also hiking its outlay for the PMAY program during this year’s Budget, we expect the demand for affordable housing to grow in the upcoming quarters.”
Boman Irani, President elect, CREDAI National

“RBI’s decision to maintain the repo rate has been received well by real estate industry as it will not only accelerate housing demand and supply but also supplement sectoral growth overall. This move will especially provide an impetus to affordable housing, as purchasing power of homebuyers as well as overall industry dynamics remain relatively strong.”
Harsh Vardhan Patodia, president, CREDAI National

“The RBI’s decision to keep the repo rate unchanged at 6.50 per cent is a welcome move signaling that interest rate hikes could be over. Also, time to balance growth and inflation. This will certainly positively impact the rate sensitive segments of affordable and low-income group housing. Keeping the repo rate unchanged will help in offsetting the rising property rates and will reduce home buyers’ burden to a large extent. Real estate industry is linked with several other allied industries and therefore it impacts the entire economy. We urge the government to offer relaxations in stamp duty fees that it offered at the time of the pandemic so as to further encourage homebuyers’ interest in property buying.”
Sandeep Runwal – President, NAREDCO Maharashtra

“The RBI’s decision to keep the repo rate unchanged was a much-needed respite for the real estate sector. This decision will provide stability in the home loan category and keep the EMIs unchanged. It will maintain the buying sentiment in the real estate sector and may lead to an upsurge in the mid-segment housing category. We also expect the demand for luxury and premium housing to remain unaffected. Despite the positive impact of this decision, the RBI Governor has signalled that this move may only provide temporary relief and may be necessary to combat the inflationary growth in the country. However, we hope that interest rates will remain in single digits, which would be favourable for the real estate sector in India. Overall, this decision is likely to stabilise the real estate sector in the short term.”
Venkatesh Gopalkrishnan, CEO, Shapoorji Pallonji Real Estate

“Keeping the repo rate unchanged at 6.50 per cent is a good decision taken by RBI. This will help keep inflation in check and improve market sentiments, which is the need of the hour. This is a big booster for the real estate sector which was overlooked in the recently concluded budget. We can look forward to seeing resurgence for real estate demand. We hope that the State Government will step-in again to lighten the homebuyer’s load by reducing stamp duty to further boost the sentiments.”
Pritam Chivukula – Co-Founder & Director, Tridhaatu Realty and Treasurer, CREDAI MCHI

“Keeping the current market conditions and inflation in mind, the move by the RBI to keep the repo rate unchanged is a welcome one. This will help in keeping the economy on track and controlling inflation. We expect demand for housing to rise, more stability to property prices coupled with market sentiments improving. Also, for first-time home buyers, acquiring a home is considered as the biggest asset and this move will have a positive impact on a buyer’s decision.”
Himanshu Jain, VP – Sales, Marketing and CRM, Satellite Developers Pvt. Ltd. (SDPL)

“The RBI, has decided to keep its repo rate unchanged at 6.5%, with its stance at “withdraw of accommodation” and is an encouraging sign. While challenges in geopolitics and the resultant downside risks to growth prevail, the next few months will be critical and will define the course for 2023. It is a positive sign that the headline inflation is moderating, however it continues to remain above RBI’s target and thus remains a monitorable. The unchanged repo rate is likely to give some breather to homebuyers as the RBI has raised the repo rate by a cumulative 250 basis points since May 2022, thereby pushing up interest rates for homebuyers to 9.5% and above. Given the expected nominal growth in income levels paired with sturdy prices in a cautious economic environment, RBI’s pause on repo rate is a much-needed step to boost real estate sentiment.”
Vimal Nadar, Head of Research at Colliers India

“We appreciate that the RBI has not altered the REPO rates. After a time of turmoil, the market has remained calm, and this decision will be a huge relief for homebuyers. There is a growing demand for real estate, and consumers want to purchase properties from reputable developers. This decision demonstrates the strength and stability of the Indian economy, which will entice more people to buy homes and fulfil their real estate dreams. We believe that in future the central bank will think about lowering the REPO rates, which would be a huge relief for homebuyers.”
Manju Yagnik, Vice Chairperson of Nahar Group and Senior Vice President of NAREDCO- Maharashtra

“We are happy that the RBI has kept the REPO rates unchanged. The market has been stable after a period of volatility, and this decision will be big relief for homebuyers. There is rising demand for property, and home buyers are looking to purchase homes from a reputed developer. This decision shows that the Indian economy is stable and doing well, which will encourage home buyers to come forward and buy their dream homes. We are hopeful that in future the central bank will consider reducing the REPO rates, which will be great relief for the Home buyers.”
Ayushi Ashar Director, Ashar Group

“A good decision by RBI to keep the repo rate unchanged at 6.50 per cent. This will positively impact the entire real estate spectrum and value chain. Demand for housing will go up and the momentum that we were seeing in the last couple of quarters will continue.”
Bhushan Nemlekar, Director, Sumit Woods Limited

“The RBI’s decision to keep the repo rate unchanged at 6.50 per cent is in line with consumer sentiments. The real estate sector will see increased demand for housing whilst keeping inflation in check. This would also help in bringing more liquidity into the sector thus balancing growth.”
Samyak Jain, Director, Siddha Group

“The decision by the RBI leaving repo rates unchanged at 6.50 per cent is a good move which will halt inflationary trends and increase housing demand. We can expect market sentiments to improve as more liquidity comes into the sector. Further, we look forward to the government lowering stamp duty rates, which will bring cheer to homebuyers, driving housing demand.”
Manoj Patwal, Founder & MD, BetterServ Ventures Pvt. Ltd.

“The RBI’s decision to leave the repo rate unchanged at 6.50 per cent will surely help market sentiments to soar. This will keep inflation in check, improve housing demand and enhance growth of the sector. This will offset the huge financial burden on home buyers and will now see home buyers actively seeking to buy their desired home.”
Kairav Shah, Chief Sales Officer, Labdhi Lifestyle

Also Read: CREDAI Urges RBI to Maintain Repo Rate amid Increasing Construction Costs and Rising Housing Prices

The post Repo Rate unchanged what it means for Real Estate? appeared first on Square Feat India.

Here is what real estate industry experts have to say:

Dr Niranjan Hiranandani -National Vice Chairman- NAREDCO
“The Economic survey evidently indicated the upward growth trajectory of the Indian economy, corroborated by RBI  pegging the FY23-24 GDP growth rate at 6.4%. Indian economic resilience is reflected with improved capex, enhanced capacity utilization, improved urban and rural consumption, augmented investments and jobs creation. The geo-political tumultuous, recession signals, and weakening of  western economies will reorient the growth scale towards the booming economy of India. This  phenomenon will continue to draw high global traction which will fuel the demand across the real estate asset classes. The pricing index of the affordable housing segment will have detrimental cascading impact due to projected sticky core inflationary trend. Though surplus liquidity will power credit growth in the real estate sector, demand economics may be challenged  in the affordable house segment – which is the broad spectrum of the consumption pyramid. The outrageous hike of 250 basis point since May 2021, needs to be warranted before it turns negative for the ascending Indian economic  growth curve. The impact of home loan interest rate hike will be highly deterrent in the affordable housing segment as it will impact the price sensitive homebuyers and fatigue the supply of the developers. The luxury and mid housing segment players will remain cautious with a bit longer sales cycle.” 

Kaushal Agarwal – Chairman, The Guardians Real Estate Advisory
“Consecutive rate hikes by the RBI this year were aimed at re-anchoring the inflation expectations and maintaining financial stability. Thus far, the rising cost of house ownership led by higher EMI, higher stamp duty and other factors has not affected real estate sales, which is a firm indicator of genuine demand for housing. But any further hike in the repo rate might temporarily limit the growth momentum of the real estate sector. Although the recently concluded budget was tailor-made keeping the salaried and the middle class in mind, a rate cut at this stage could have triggered the sentiments of the homebuyers sustaining the growth momentum.”

Pritam Chivukula – Co-Founder & Director, Tridhaatu Realty and Treasurer, CREDAI MCHI
“RBI ‘s decision to hike the interest rates to tackle the inflation and ensure domestic economic recovery was a no-brainer. But a rate cut would have been a big booster for the real estate sector which was overlooked in the recently concluded budget. The sharp acceleration of rates consecutively for the sixth time in a short period will have a short-term effect on the sentiment of homebuyers as low interest rates have been the biggest factor in the resurgence for real estate demand in the last two years. We hope that the State Government will step-in again to lighten the homebuyer’s load by reducing stamp duty to boost the sentiments.”

Himanshu Jain, VP – Sales, Marketing and CRM, Satellite Developers Pvt. Ltd. (SDPL)
“Keeping the current market conditions and inflation in mind, the move by the RBI was expected to keep the economy on the track in the current highly volatile scenario. The rising property prices had already added to the woes of the homebuyers and now the decision of RBI to increase the repo rate will temporarily dent the current demand momentum. Also, for first-time home buyers, acquiring a home is considered as the biggest asset and these short-term decisions are likely to have a major impact on a buyer’s decision.”

Bhushan Nemlekar, Director, Sumit Woods Limited
“Earlier, due to the pandemic and the geopolitical issues, the input costs were already high and now with these consecutive rate hikes, it will only dampen the spirit of the entire real estate value chain. The cost of borrowing for both developers and buyers will be impacted and this will result in undesired rate hikes across the spectrum. However, we did not see much impact on the buying spree in the last couple of quarters since there are genuine buyers in the market to keep the momentum going.”

Dr. Sachin Chopda, Managing Director, Pushpam Group
“RBI’s decision to hike the policy repo rate was anticipated, factoring the rise in inflation. The rate hike is likely to shrink liquidity in the economy overall, especially impacting the investor’s sentiments. There will be a short-term pause on the minds of the investors while assessing the volatility of the current market dynamics. However, they are bound to return soon in the market once it is stable.”

Dinesh Doshi, President, NAREDCO Progressive Neral Karjat Unit
As expected, RBI has raised the repo rate by 25 basis points to 6.5%. The obvious impact on home buyer sentiment is expected – mostly in affordable and budget segments – although overall, housing sales are not likely to be majorly impacted. With retail inflation finally within its tolerance band of 2% to 6% in the last two months of 2022, hopefully, we are at the end of the ‘hike rates’ cycle, and should not have any further home loan EMI hikes. Home buying sentiment should be positively impacted in days to come, with festivals like Gudi Padwa adding to the positive vibes.

Also Read: RBI RR Hike to Impact home sales

The post RBI hikes repo rate by 25 bps to 6.5%, EMIs to get costlier appeared first on Square Feat India.

The 25 bps rate hike is much along the expected lines. With repo rates now at 6.5%, there could be some repercussions on housing uptake as home loan interest rates will head further north. The rates had already crept up after five consecutive rate hikes over the last one year. This will add to the financial burden on homebuyers as apart from home loan interest rates, property prices have also inched up in the recent past two to three quarters.

Given that interest rates may breach the 9.5% mark with today’s hike, we may see some pressure on sales volumes in the affordable and lower mid-range housing segments, which are more cost-conscious. The affordable segment has already been in the doldrums, and adding further to the cost of acquisition obviously does not help.

That said, the Indian housing market continues to be largely end-user driven – and end-users, unlike investors, focus less on ROI and more on the perceived value of homeownership. Furthermore, commodity prices are now falling and inflation is moderating. As such, we are unlikely to see any hikes in the near future, which will be positive for the housing sector in the times to come.

The monetary policy impacts real estate demand in several ways. When the central bank raises interest rates, borrowing costs for buying real estate increase, which can reduce demand for housing. Conversely, when interest rates are low, borrowing costs are lower, and demand for real estate may increase. Also, an expansionary monetary policy, which increases the money supply, can lead to increased consumer spending and borrowing, potentially driving up demand for real estate.

Finally, confidence in the economy is closely tied to the monetary policy. When the central bank is seen as effectively managing the economy and maintaining stability, it can increase consumer confidence and demand for real estate.

Also Read: RBI RR Hike to Impact home sales

The post Monetary Policy – Rate Hike As Expected, May Further Impact Affordable Housing Demand appeared first on Square Feat India.

Real estate experts expect that the repo rate hike may have a short term impact on the real estate demand.

Kaushal Agarwal – Chairman, The Guardians Real Estate Advisory
“The RBI’s decision to hike the repo rate was aimed at re-anchoring inflation expectation and will eventually result in the strengthening of the economy. An unstable economy is not conducive to the overall health of the real estate industry and therefore, the RBI’s approach towards reviving the economy so far has enabled a robust recovery in the real estate sector. The all-time low home loan interest regime boosted the housing demand and helped the economy to get back to the pre-COVID levels. The rise in property prices due to the increased interest rates, metro cess and higher stamp duty has not affected the sales in the past couple of months which proves that there is a genuine demand. The move to hike the repo rate might temporarily limit the growth momentum of the sector but the demand will continue to sustain.”

Pritam Chivukula – Co-Founder & Director, Tridhaatu Realty and Treasurer, CREDAI MCHI
“After two years of unchanged repo rate, RBI ‘s decision to hike the interest rates to tackle the inflation was a no-brainer. The sharp acceleration of rates consecutively for the second time in a short period will have a short-term effect on the sentiment of homebuyers. The interest rates have been the biggest factor in the resurgence for real estate demand in the last two years. We hope that the State Government will step to lighten the homebuyer load by reducing stamp duty and premiums.”

Himanshu Jain, VP – Sales, Marketing and CRM, Satellite Developers Private Limited (SDPL)
“The prices of construction materials are already high and the decision of increasing the repo rate will somewhat dent the current demand momentum and add to the woes of developers. However, keeping the current market conditions and inflation in mind, the move by RBI was expected to keep the economy on the track in the current highly volatile scenario. For first-time buyers, acquiring a home is considered as the biggest asset and these short-term decisions are unlikely to have a major impact on a buyer’s decision.”

Jitrendra Shah, CEO, Rockford Group
“RBI’s decision to hike the repo rate was anticipated to keep the inflationary expectations under check. From the real estate perspective, this move will impact the overall growth of the industry by dampening sales momentum while property prices are already on rise. However, we believe that this may also encourage the fence-sitters to make the most of the current schemes offered by developers in the market and take the plunge.”

Shraddha Kedia-Agarwal, Director, Transcon Developers
“The recent announcement by the Reserve Bank of India on increasing the repo rate by 50 bps, bringing them to 4.90%, will affect the real estate sector to an extent. Banks will soon likely to increase the home loans that will directly impact the consumer’s buying behaviour. The real estate industry was expecting this move owing to tackle the tight inflation of the country. However, we believe that preference for owning a home by homebuyers and strong wage growth will continue to support the housing market.’’

Dr. Sachin Chopda, Managing Director, Pushpam Group
“RBI’s decision to hike the policy repo rate by 50 basis points was anticipated, factoring the rise in inflation. The rate hike is likely to shrink liquidity in the economy overall, especially impacting the investor’s sentiments. There will be a short-term pause on the minds of the investors while assessing the volatility of the current market dynamics. However, they are bound to return soon in the market once the normalcy is bounced back.”

Bhushan Nemlekar, Director, Sumit Woods Limited
“Due to geopolitical conflict, the input costs were already high and now with this rate hike, it will only dampen the spirit of the entire real estate value chain. Cost of borrowing for both developers and buyers will be impacted and this will result in undesired rate hikes across the spectrum. However, we did not see much impact on the buying spree in the last couple of months since there are genuine buyers in the market to keep the momentum going.”

Jitesh Lalwani – President, HomeSync Real Estate Advisory
“RBI’s decision to hike in policy rates will lead to increase in housing loan interest rates impacting on the EMIs but we are still bullish about the real estate sector. Homebuyers are more concerned over skyrocketing property prices rather than rising interest rates. We are still optimistic about the current growth run for housing demand since we believe that this move may push homebuyers who are still deliberating to seal the deal. However, we urge the Government to take some necessary measures to control the rise in property prices.”

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The RBI today increased the repo rate by 50 bps, the quantum of the rate hike was on the upper end of the market expectations. The central bank has also tweaked its policy stance to withdraw the accommodative policy, ending the easy liquidity policy.

The RBI inflation trajectory above 6.5% is a cause of concern, but the big announcement was raising the limit of loans for the State Co-operative Banks and District Central Co-operative Banks to the housing sector. The housing sector is a capital-intensive business, these measures will address the growing need for affordable housing, providing easy and higher limits with enough funding avenues for the projects. It will improve credit flow to the sector and also act as a boost for housing projects in the rural areas, thereby ensuring the recovery in all pockets of the country.

While developers expect rationalization of increase in key input cost like steel and cement, coupled with interest rate reversal in home loan from a decade low rates may help the real estate sector to remain in the stable price regime.

Also Read: RBI makes Real Estate Happy for 10th Consecutive time

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“A repo rate hike of 50 bps was imminent given the current inflationary trajectory and geopolitical concerns. Although the government has taken various measures to control domestic inflation such as food export restriction and cut in excise duty, prolonged war and spike in global crude oil price is still worrisome.

From a real estate perspective, home loans are set to get costlier. Banks have already raised the interest rate on home loan by 30-40bps since the earlier repo rate hike by the RBI in May and now with the repo rate cumulatively higher by 90 basis point there will be further increase in interest rate for homebuyers. Rising interest rate along with elevated property construction cost and product price pressures could adversely impact on the real estate buyer’s sentiment. We hope that economic recovery and household income growth will serve as a cushion for sustaining consumer demand in the face of this rate hike. Further, monetary policy tightening by central banks globally and any resolution on the prolonged Russia – Ukraine war will bring price stability.”

Also Read: Monetary Policy Reaction – Entering the Red Zone

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The rate hike will push up home loan interest rates, which had already begun creeping upward after the surprise monetary policy announcement last month. Interest rates will remain lower than during the global financial crisis of 2008, when they went as high as 12% and above. Nevertheless, the current hike will reflect in residential sales volumes in the months to come, more so in the affordable and mid-segments.

The silver lining is that the Indian housing market is still largely end-user driven, so there is no investor mindset seeking the lowest possible entry point. Genuine demand comes from an underlying aspiration for homeownership.

Also Read: RBI makes Homebuyers happy, Repo rates unchanged

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There is little doubt that the RBI will further increase the repo rates in tomorrow’s announcement of the monetary policy review. What remains to be seen is the quantum of increase. The rate hike could be anywhere between 25-50 BPS. If the hike is above 50 BPS, it may impact homebuyer sentiments, and thus residential sales. It is now inevitable that home loan interest rates will finally depart from the ‘sweet spot’ territory that they have been occupying over the last 2 years, and enter into the yellow alert zone of lower overall affordability. That said, as long as they stay clear of the double-digit red zone that they saw during the global financial crisis in 2008, we expect housing demand to continue – albeit at a marginally lower pace. Even at the height of the global financial crisis, housing demand did not entirely evaporate. In India today, housing demand is driven by genuine end-user sentiment – the desire to own homes remains strong and will largely withstand marginal fluctuations in lending rates.

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