When the Reserve Bank of India (RBI) monetary policy committee held its first meeting of this financial year last month, home seekers were concerned about the impact that an increase in repo rates could have on their home loan rates. Thankfully, their hopes for a status quo announcement were fulfilled as the RBI announced its decision to maintain the current policy rates.
Commenting on the decision, Keval Valambhia, COO, CREDAI-MCHI, pointed out, “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.”
Nikunj Sanghavi, Treasurer - CREDAI MCHI, opined, “The decision to uphold the current repo rate is a welcome move in the face of a challenging economic environment worldwide, showcasing a judicious approach to balancing diverse sectoral needs, including real estate. Recognising 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.”
Sachin Marani, Secretary, CREDAI-MCHI Thane, echoed their views. “We are pleased that the RBI has decided to maintain the repo rates unchanged, considering that inflation remains above the 4 per cent target. The market had anticipated that the RBI would maintain the status quo on its policy stance in this monetary policy. The current GDP projection for FY24 is 7.0%, indicating a robust Indian economy. The repo rate has been held at 6.5% for five consecutive meetings, and there is speculation that policy rate cuts may commence from June or August onwards. The interim budget focused on maintaining fiscal discipline with no major new spending announcements, suggesting less pressure on the RBI to hike rates to control inflation. This decision will be a relief for homebuyers, especially in the affordable segment where the market is getting stabilised after a period of instability.”
Gurmit Singh Arora, National President, Indian Plumbing Association, underlined, “The Reserve Bank of India’s decision to maintain the repo rate steady at 6.5% during the ongoing global economic downturn and the spiralling inflation is indeed a pragmatic choice to protect the domestic economy. As the third-quarter financial growth of India moved up to 8.4% which was not a small number, however, it becomes a national priority to keep price stability. The prevailing repo rate is the fine-tuning measure to maintain growth and deal with inflation while the inflation rise or fall touches the RBI’s target range. Credit and financing being the core of the industry, the plumbing sector welcomes the move of the government to promote such policy that creates friendly environment for continuous business operation and investment decisions.”
Anuj Puri, Chairman, ANAROCK Group, opined that RBI’s decision will keep the ongoing residential real estate sales momentum on course and unimpeded. Aspiring homebuyers eyeing a purchase will proceed with confidence. “We saw total housing sales of over 1.30 lakh units across the top 7 cities in Q1 2024 - the highest quarterly sales in the last decade. Average residential prices across these cities have seen a significant jump in the last one year — ranging between 10-32% in Q1 2024 when compared to Q1 2023. Thus, the breather which RBI’s unchanged repo rate will provide to home loan borrowers is apt and welcome.”
