Monetary Policy Of RBI: How Repo Rate At 6.5% Will Help Homebuyers In Buying Their Dream House

On expected lines, RBI has kept the repo rate unchanged for the third time in a row at 6.5%, which is a welcome move by the real estate sector. Although, the industry wished for a rate cut, however, RBI has taken measures like shifting to fixed interest rates from floating rates on EMIs, which comes as a positive factor for home buyers. Experts believe that sustaining the rate of 6.5%, signals a steady demand for properties as home buyers can access home loans at affordable rates. Whether banks make any shift in their lending benchmark rates will be keenly watched!

Apart from keeping the repo rate unchanged, the central bank also maintained the standing deposit facility (SDF) rate unchanged at 6.25% and the marginal standing facility (MSF) rate and the Bank Rate at 6.75%. Also, the six-member MPC decided to remain focused on the withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth.

Here's what real estate experts say about the latest RBI policy outcomes:

Kaling Porwal, Managing Director, Downtown Lifespace:

The decision by the RBI to keep the repo rate unchanged at 6.5% will have a positive impact on the real estate sector and home buyers. With stable interest rates, potential home buyers can continue to access loans at affordable rates, enhancing their purchasing power. This stability fosters confidence in the real estate market, encouraging investment and development. It also supports existing homeowners by maintaining manageable mortgage repayment levels. Overall, this decision fosters a conducive environment for growth in the real estate sector while providing favorable conditions for individuals aspiring to own homes.

Lincoln Bennet Rodrigues, Chairman & Founder, The Bennet and Bernard Company:

In the residential segment, buyer sentiment has continued to be robust and this has resulted in home sales showing an appreciable rate of growth. Post-pandemic, the luxury housing market has acquired a strong foothold, thanks to the rising disposable incomes accompanied by a desire for better living, subsequently driving up prices in this segment. As buyers seek a signature style of living, this trend is expected to continue in the near future, given change in lifestyles, rapid urbanization and needs. The heightened demand for luxury properties has been further bolstered by the rise in investments from non-resident Indians (NRIs). However, a further reduction in the key rates would be widely celebrated as low interest rates have been a crucial factor in the revival of overall real estate demand and improvement in the liquidity situation which is vital for the sector.

Rishabh Siroya founder of Siroya corp:

For the real estate industry, this decision fosters an atmosphere of predictability and sustains a steady demand for properties. Developers can benefit from sustained interest from potential buyers, leading to sustained growth in the sector. Moreover, the decision maintains the balance between supply and demand, ensuring that housing remains accessible to a larger set of individuals

The unchanged repo rate exhibits the RBI's commitment to economic stability, fostering an environment where the real estate market and home buyers can mutually thrive. It encourages financial planning, spurs economic activity, and contributes to the overall growth of the housing sector.

Tribhuwan Adhikari, MD & CEO of LIC Housing Finance:

This ensures that a stable rate environment is here to stay for some more time. India's consumption story remains strong, and the festive season ahead will add further buoyancy to the realty market. Good news for property buyers to take the plunge when sentiments are benign.

Anoop Kumar Bhargava, CEO & Director, Empire Centrum:

The real estate sector, which is witnessing a gradual recovery after the pandemic-induced slowdown, will benefit from this status quo as it will ensure that the home loan interest rates remain stable and affordable for the home buyers. We appreciate the RBI's efforts to provide adequate liquidity and regulatory support to the housing sector, which is crucial for its revival and growth. We hope that the RBI will continue to monitor the situation and take appropriate measures to stimulate the demand and supply in the real estate market.

Ramani Sastri, Chairman and MD, Sterling Developers:

The real estate market has seen a strong rebound in in the recent past driven primarily by end-users and we see this up-cycle continuing in 2023. Also, the strong fundamentals for housing demand will keep the momentum upwards for realty sales where buyers are carefully filtering out projects and looking for the right product mix in terms of affordability, accessibility and quality of living. The continuation of existing policy rates and undoubtedly, a further reduction in interest rates in the near future would be preferred to bolster overall market confidence and make it more enticing for home buyers. Moreover, as the festive season approaches, it presents a golden opportunity to reinvigorate the real estate market with reduced interest rates ahead of the festive season. It also has to be kept in view that real estate is considered as the safest bet for investment compared to other instruments. All of this will boost real estate and enhance economic growth in the larger context. Overall, we are optimistic that the government would shape its policy actions to promote demand even further and incentivise people to buy more properties, as the sector is the primary contributor to economic growth.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns. in advises users to consult with certified experts before making any investment decision.