Dr Niranjan Hiranandani, MD, Hiranandani Group
The status quo in repo rate by RBI is governed by a mix of global and domestic factors reflecting better anchoring of inflation and nimble liquidity management. With an outpaced GDP growth and a downward inflation curve trajectory, India’s economic performance is noteworthy despite geo-economic shocks. Development of infrastructure, increased labour employment, enhanced fiscal expenditures, improved governance, and regulations along with structural policy reforms reflect the RBI’s multifaceted approach to strengthening India’s financial stability. RBI indicates emphasises the need to consider macro-economic broad risk factors while keeping customer-centricity in mind while deploying effective monetary policy. Hence, retaining an accommodative stance even under the benign geo-political mood is a step in the right direction. The uptick in new project launches, fresh supply of housing units, soaring sales in luxury housing, record high property registrations, and an average price appreciation of 7% demonstrates the strong real estate market performance index in the backdrop of a conducive market scenario. An increase in government capital expenditures towards building physical infrastructure and fuelling liquidity management will continue to boost construction activities. This will increase employment, growth in GDP, housing demand, and economic stimulation. Industry highly recommends differential policy treatment to combat negative growth in the affordable housing segment. A calibrated approach including fiscal intervention, tax exemption or cross-subsidization is necessary to restore growth in affordable housing.

Anuj Puri, Chairman – ANAROCK Group
With the fundamentals of the Indian economy remaining strong despite all global headwinds and inflation well under control, the RBI once again decided to keep the repo rates unchanged at 6.5%, thus extending the festive bonanza that it gave to the homebuyers in its last two policy announcements. Thus, homebuyers retain their advantage of relatively affordable home loan interest rates.
If we consider the present trends, the housing market has been unstoppable, and unchanged home loan rates will help maintain the overall positive consumer sentiments. Given that housing prices have risen across the top 7 cities in the last one year, this breather by the RBI is a distinct advantage to homebuyers. Going forward, we can expect the momentum in housing sales to continue, significantly aided by the unchanged repo rates which will keep home loan interest rates attractive and also signal ongoing robustness of India’s positive economic outlook.

Ayushi Ashar – Director at Ashar Group & Member of Managing Committee of MCHI-CREDAI
The consistent maintenance of the repo rate at 6.5% for the sixth consecutive time reflects the central bank’s commitment to achieving the 4% Consumer Price Index (CPI) target. This stability in monetary policy is crucial for fostering economic predictability and sustaining investor confidence. An unchanged rate may seem static, signals a strategic approach to balance inflation control with economic growth. As a real estate developer, we acknowledge the importance of a steady interest rate environment, as it influences borrowing costs and subsequently impacts the property market. The resilience in the repo rate provides a conducive atmosphere for sustainable development.

Keval Valambhia COO CREDAI MCHI
Ensuring stability in interest rates holds profound implications for both the residential and commercial real estate domains. Keeping the Repo rates low will foster an environment of financial accessibility through consistently low borrowing costs. Stable interest rates serve as a pivotal catalyst for driving heightened interest and investment in properties across both sectors. This, in effect, generates a ripple effect of increased demand, thereby injecting vitality into the real estate industry and also to economy at large. Amidst the intricacies of economic fluctuations and market uncertainties, the imperative of prioritizing affordable housing cannot be overstated.

Anshul Jain, Managing Director, India & Southeast Asia and Head of APAC Tenant Representation, Cushman & Wakefield
The update is in line with the last policy statement from RBI where the expectation was for the benchmark repo rate to stay unchanged at 6.5% and to have the target inflation rate of 4%, down from the current average of around 5.5%. For the Indian Real estate space, we do not expect the today’s update to have any material impact on the on-going positive sentiment. However, we hope the interest rates start to drop soon as this will also revive sentiments of affordable homebuyers.

Manju Yagnik, Vice Chairperson of Nahar Group and Senior Vice President of NAREDCO- Maharashtra
The RBI has maintained the 6.5% repo rate, as expected. Nonetheless, considering that the macroeconomic conditions are favourable and the rate has been held at 6.5% for the past few quarters, the Indian real estate market and the overall economy would have benefited immensely from a rate reduction. This action will keep consumer housing costs and mortgage rates higher, and we hope it won’t negatively affect the feelings of prospective homeowners.

Dr. Samantak Das, Chief Economist and Head- Research & REIS, India, JLL
India’s economy, driven by accelerating growth indicators and softening inflation has provided comfortable legroom to the RBI to keep repo rate unchanged at 6.5% for the sixth consecutive time. Despite continued global uncertainties, India’s GDP growth has been strong due to robust domestic demand due to structural drivers of infrastructure and digital transformation of the economy. India’s residential markets in 2023 hit a historic peak, buoyed by positive buyer sentiment and still-healthy affordability levels. 2023 sales were in fact 25% higher than the previous highs seen in 2010. At the prevailing interest rates, we expect the residential sales market to clock a 15-18% y-o-y growth in 2024 too keeping the current momentum intact. Given India’s growth projections, we are hopeful that a future repo rate cut would give a massive fillip to affordability in 2024, which will be second only to 2021 peak affordability levels reported in JLL’s Home Purchase Affordability Index. This is likely to push India’s residential sales in value terms to over INR 3 lakh crore over the next year with the potential to double over the next five years, supported by the policy ecosystem and a pragmatic interest rate regime.

Vihang Sarnaik, Director, Vihang Group
We’re pleased with the RBI’s decision to maintain the status quo on REPO, especially given the ongoing inflation above the 4 per cent target. It aligns with market expectations, indicating a sense of stability in the current monetary policy. As a leading developer catering the middle-class housing aspirations, this will keep the housing demand intact. The decision to keep the repo rate intact will help developers like us who catering the middle-class aspiration of owning a home. It will help to continue the current momentum in real estate sales as even a 0.25 BPS increase would have impacted the home-buying sentiments in this segment.

Nikunj Sanghavi, Managing Director – Veena Developers, Treasurer – CREDAI MCHI
The decision to uphold the current repo rate is a welcome move in the face of a challenging economic environment world wide, showcasing a judicious approach to balancing diverse sectoral needs, including real estate. Recognizing the intricate dynamics in transmitting repo rate adjustments to lending rates, this decision provides a glimmer of positivity that holds the potential to invigorate buyer sentiments. Nevertheless, as an industry, we maintain vigilance, considering the cumulative impact of recent rate hikes on demand, especially in the affordable and middle-income segments. Emphasizing the broader economic interest and the housing industry’s well-being, we advocate for a future reduction in the repo rate by the RBI.

Also Read: Housing sales momentum to continue as RBI holds repo rate

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According to the data from the office of Stamp Duty and Registartion, the last month that is December 2022, Mumbai witnessed a total sales of 9,367 homes generating a total revenue of ₹835.36 crore.

This is way better than the month of November where 8,965 home registrations took place generating a revenue of ₹683.8 crore.

In October month the sales figure stood at 8,422 generating a revenue of ₹736 crore.

In September the home sales figure was 8,628 generating a revenue of ₹734.18 crore.

In August the number of home sales in Mumbai stood at 8,552. In April the number of registration that took place in the city stood at 11,743, it was 9,839 in May, in June the numbers were 9,919, and July the number of registrations shot up to 11,340.

So overall the best month for home sales in Mumbai since the start of this financial year 2022-23 has been April where a total of 11,742 home sales took place.

Over all the year has done good compared to many previous years, in spite of no stamp duty cut and a regular increase in the repo rate.

With world situation changing with every minute, cost of construction going up and no stamp duty waiver in sight, the year 2023 will hold many surprises.

Also Read: Mumbai property registrations up by 15% in Nov 22

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Taming steep inflation hike is a preordained measure by RBI, given the global economic ballgame. Soaring commodity prices especially with food and energy prices, plummeting currencies, supply side shocks are the foremost reasons for rising input cost. A two-thong approach by the RBI governor and the Government of India by means of monetary and fiscal intervention is an absolutely necessitated step to administer economic growth as well as arrest inflationary pressure. A corroborated approach is hailed by India Inc to sustain economic resiliency and boost sentiments.

It is evident that home loan interest rate hike will impair the home buying rally as pay out in terms of EMI is scheduled to rise. But according to me this crater in demand sentiment is a makeshift move, as home loans are based on floating rate for a long tenure. The EMI constraint will be eased as rates are expected to normalize once the global situation is stabilized. The hike in the limit of individual loans by co-operative banks by 100 per cent is a welcome initiative for home buyers who opt for home loans from co-op banks.

RBI’s GDP growth forecast for FY23 is pegged at 7.2 per cent with risks evenly balanced, while the repo rate is still below pre-Covid-19 levels. This creates hope that a normal monsoon coupled with measures by GoI should help ease inflation stress, and the RBI’s ‘accommodative’ stance, hopefully, may return sooner than later.

Also Read: RBI withdraws accommodative policy ends, easy liquidity policy

The post Interest rate hike to dent homebuying rally in short run appeared first on Square Feat India.

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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By Varun Singh

Several banks like the State Bank of India (SBI), Kotak Mahindra, Bank of Baroda (BoB) and Punjab National Bank (PNB) are offering loans at record low-interest rates to cash in the spending rush ahead of the festive season.

State Bank of India (SBI) will charge home loan borrowers an interest of 6.7% based on their credit score, irrespective of the loan amount. The offers are available to all segments of borrowers irrespective of the profession of the borrower. The 6.70% home loan offer is also applicable to balance transfer cases.

Kotak Mahindra Bank has reduced its home loan interest rates by 15 basis points (bps) from 6.65% to 6.50% p.a. This special rate of 6.50% p.a. is a limited period festive season offer beginning 10th September and ending 8th November 2021.

Bank of Baroda (BoB) is offering a waiver of @0.25% in the existing applicable rates for home and car loans. In addition to that, the bank is also offering a waiver of processing fees in home loans. Now, home loan rates will start at 6.75% and car loan rates start at 7.00%.

Punjab National Bank (PNB) too has slashed the repo-based lending rate by 25 basis points (bps) to 6.55%.

HDFC too, announced a festive offer with home loans starting from 6.70 per cent. This offer will be applicable to all new loan applications irrespective of the loan amount or employment category. The special festive offer at 6.70 per cent is for all loan slabs and for all customers with credit score of 800 and above.

Real estate experts feel that these interest rate cuts could be a major factor in boosting the home sales this festive season.

Vedanshu Kedia, Director, Prescon Group said, “It is an encouraging move by the leading banks to slash interest rates especially during the onset of the festive season. Even now, a low-interest rate by reputable banks is bound to catapult unimaginable economic growth in the country as a result of enhanced consumption. The initiative will surely make homeownership affordable and viable for the fence-sitters who can now plunge on the best opportunity to buy their dream home.”

Cherag Ramakrishnan, Managing Director CR Realty said, “Considering the auspicious festive season ahead, the timing of the reduction in interest rates by leading banks couldn’t have been better. The real estate market has seen decent sales this year and this reduction in interest rates would further help to keep up the sales momentum.”

Bhushan Nemlekar, Director, Sumit Woods Limited said“The reduction in home loan rates by leading banks is going to help the demand side immensely. The real estate sector has benefited immensely from the record low home loan rates. Currently, the all-time low, sub-7% interest rates are encouraging consumers to proceed with their purchase and quickly close their transactions. Low interest rates also help enhance eligibility for home buyers thereby bringing more customers into the marketplace.”

Pritam Chivukula – Co-Founder & Director, Tridhaatu Realty and Hon. Secretary, CREDAI-MCHI said, “The reduction in home loan interest rates by leading banks for a limited period have extended the best buying opportunity for the homebuyers. The banks are competing to grab the home loan customers before the fiscal year ends. Currently, the home loan rates are at an historic 15 year low, as banks compete in a market with low credit demand. The benign interest rates environment will continue for some time and it is unlikely that interest rates will fall further from the current levels. For the next few days, the buyers can swoop in on good deals on the back of rock-bottom interest rates on home loans along with festive offers from good developers on the eve of expected price rise. We can already see that the demand for residential properties has picked up now as people are beginning to believe that this is the best time to buy a property.”

Ashok Mohanani – President, NAREDCO Maharashtra said, “There is already a growing desire of owning a home as consumers look at it as a necessity in this unprecedented time of the COVID-19 pandemic. With the onset of the festive season, there is a stiff competition amongst the financial institutions to provide the consumers with the best home loan interest rates. This is the best time to buy a home as it gives the aspiring homebuyers a lifetime opportunity to purchase their dream home with various festive offers as well as all-time low interest rates. These factors are also proving to help spur the real estate demand that was temporarily hit last year as a result of the pandemic.”

Jayesh Rathod, Executive Director, The Guardians Real Estate Advisory said, “The move to reduce interest rates by few banks is encouraging and will create competitive housing finance options for the home buyers and eventually pave path for robust housing demand. We have been maintaining since long that banks need to pass on the benefits of the reduced repo rates to consumers and we are happy to see the same happen now. The low interest rate regime is going to be a game-changer for the whole real estate sector especially at a time when the economy is on a recovery trail. It will also augur well for ready-to-move-in homes and the affordable housing segment. Both of these categories will benefit immensely from the reduced rates. From the consumer perspective, this is going to be the last call to take advantage of the bank offers as a difference of even a half percentage on the interest rate on a housing loan can save lakhs of rupees of the prospective buyers.”

Also Read: Homebuyers Prefer This Period For Home Loans

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