Housing Sales May Bbe Hit As Mortgage Rates Likely to Rise: CREDAI, NAREDCO on RBI Policy

Housing sales could be impacted during the upcoming festive season following the RBI's decision to hike repo rate by 25 basis points, realtors' industry bodies CREDAI and NAREDCO said on Wednesday. Interest rates on home loans would increase after the RBI's latest move, they added.

CREDAI National President Shekhar Patel and NAREDCO President Praveen Jain said the RBI's decision would lead to a rise in interest rate on home loans, which in turn, could have some impact on housing sales. Patel said that the hike in repo rate should be seen in the context of global uncertainties and inflationary concerns.

The RBI monetary policy would have a bearing on the cost and availability of funds, he added. "We are also entering the festive season, which is an important period for the housing market, and the increase in borrowing costs could have some impact on sales during this period, although the underlying demand for housing remains strong," Patel said.

Jain noted that the housing demand remains strong at present. "We expect the impact of this increase on the residential market to remain limited, supported by strong buyer sentiment, festive demand and the long-term need for homeownership," the NAREDCO President said. The real estate sector will continue to demonstrate strength and resilience in maintaining its current momentum, Jain observed.

Patel further said, "We should understand that for a homebuyer, the interest rate at any particular point is only one part of a much longer decision." "A home loan is generally a commitment of at least 15 years. During that period, there will be times when rates go up and times when they come down.

We should not look at repo rate changes in isolation. What matters is the long term outlook for the economy & overall growth," he added. CREDAI and NAREDCO are the two major industry bodies for real estate developers with a combined membership of around 20,000 builders.