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No Move In Repo Rate! Good News For Real Estate? - Details

On Friday, Reserve Bank of India decided to keep the policy rate unchanged at 6.5 per cent for the fifth time in a row as it maintains a tight vigil on inflation. The rate increase cycle was paused in April after six consecutive rate hikes, aggregating to 250 basis points since May 2022.

Times Now Digital Times Now Digital

Updated Dec 9, 2023 , 01:57 PM IST

RBI on repo rate (Image Source: iStockphoto, TN Digital)

Announcing the bi-monthly monetary policy, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) unanimously decided to keep the repo rate unchanged at 6.5 per cent. He said the MPC will remain "actively disinflationary".

According to The Economic Times report, experts indicate that the increased liquidity within the economy is set to boost construction activities, positively influencing new property launches in key real estate markets. This surge is expected to bring more certainty for homebuyers, providing stability in loan repayments and reducing the risk of sudden increases in borrowing costs.

The committee's decision to maintain the current repo rate is a prudent move for the real estate market. The Monetary Policy Committee's acknowledgment of controlled inflation fosters optimism among potential homeowners, contributing to the positive outlook for the industry. This decision, paired with the festive season, boosted the ongoing upward trend in the Indian real estate market.

Hiranandani, Chairman and Managing Director, House of Hiranandani said, 'The residential real estate sector in major Indian cities has continued its upward trajectory, reaching its highest point in six years. This growth is largely attributed to significant sales in the mid-income and premium housing sectors, which have remained robust despite hikes in mortgage rates and property prices.'

Mr. Dinesh Khara, Chairman, SBI said, 'The RBI policy announcement is a clear affirmation that the Indian economy is poised for a stable inflation and high growth regime with the possibility of growth breaching 7% for the 3rd successive year. The measures regarding liquidity will facilitate better fund management by banks. The enhancement of limits under UPI for education and healthcare will ensure that UPI truly emerges as a public good.'

LC Mittal, Director, Motia Group said, 'The Reserve Bank of India (RBI) has decided not to adjust the repo rate for the fifth consecutive time, thus your home loan EMIs (equated monthly installments) will stay the same for the time being. Leading banks and mortgage providers, including HDFC Bank, Bank of Baroda, and State Bank of India (SBI), currently provide house loan rates ranging from 8.4 to 9.05 percent.'

The report added that the affordable and low-cost housing segment, which is more sensitive to interest rate changes, has seen a dip in sales volumes in the quarter ending September.

'RBI's prudent move in keeping the repo rate unchanged brings a sigh of relief for homebuyers. This stability in interest rates ensures a conducive environment for those aspiring to own a home. This decision will not only bolster the real estate market but also foster economic growth,' said Jetaish Gupta, Co-founder & Director, Adore Group.

'In looking ahead to FY25, the RBI expects moderation in inflation at 5.2% for Q1, 4% for Q2 and 4.7%,' said Gurmit Singh Arora, National President, Indian Plumbing Association.

Subhash Goel, MD, Goel Ganga Developments said, 'For home buyers, an unaltered repo rate is a treat since it provides them with another opportunity to purchase properties at the best prices. The MPC last raised this rate by 25 bps to 6.50 per cent at its meeting in February 2023'

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