In less than a month, the second interest rate hike by the Reserve Bank of India (RBI) on Wednesday will dent home buyers’ mood, believes developers from Navi Mumbai. The repo rate has been hiked by 50 basis points, thereby, taking it to 4.9 per cent. The move will make the home loan costlier and affect housing sales.
Last month, there was a four-day property exhibition in the city after a gap of three years when, in a surprising move, the central bank had increased the repo rate. The second repo rate hike has come in less than a month.
Prakash Baviskar, president of NAINA Builders Welfare Association (NBWA) and general secretary of Marathi Bandhkam Vyavsayik Association (MBVA) says that home buyers in the lower-income group and middle-income group will be affected by the decision.
“There are two categories of home buyers who make a purchase on loan. One who wants to save tax and the other who cannot buy the property at one go,” said Baviskar, adding that the second one mostly falls in the lower-income group and a little bit in the affordable segment.
“The hike in repo rate will push the interest on home loans and thus rise in monthly EMIs. Apart from affecting household budgets for those who have already taken loans, the hike sends bad news to those who were looking to buy a home,” said Baviskar.
While the RBI has taken the decision to hike interest to control the rising inflation, Navi Mumbai where real estate is a primary business will have a cascading effect on sales of properties.
Manohar Shroff, Senior Vice President of the Maharashtra Chamber of Housing and Industry (MCHI) Navi Mumbai unit said that there will be an impact on the sales of housing.
“Common citizens are already worried about the rising inflation and now with the costly home loans, buying homes will be difficult for prospective home buyers,” said Shroff. He added that the sector was reviving after two years of sluggish period and now two subsequent rises in interest rate will affect the buyers’ enthusiasm.
