Good news for homebuyers, low interest rates to boost home sales: Realtors

The Union Budget may have disappointed those who were seeking relief under income tax slabs, but the latest decision by the Reserve Bank of India (RBI) has surely brought smiles to potential homebuyers in the country.

As the Monetary Policy Committee (MPC) of the RBI decide to keep the repo and reverse repo rates unchanged, the country’s real estate developers are now anticipating further surge in demand for residential homes.

After the three day long bi-monthly MPC meeting, the committee has kept the repo and reverse repo rates unchanged at 4 per cent and 3.35 per cent, respectively. What this essentially means for loan seekers is that the banks and other financial lenders are likely to keep loan interest rates intact. This, according to industry experts, will be more beneficial for housing industry as homebuyers would be benefitted from a lower home loan interest regime.

Currently, the interest rates offered by most leading banks and non-banking financial institutions is ranging between 6.4-6.9 per cent -- lowest in years. And today’s decision is likely to keep the rates intact -- encouraging more number of fence sitters to take the plunge.

According to Amit Modi, director at ABA Corp and President Elect of CREDAI Western UP, it would be helpful for the real estate sector through its path towards recovery. “We have to understand that this industry does not work alone but depends on the growth of all associated industries. The accommodative stance that RBI has taken will boost the economic environment and lead to a conducive situation for the stakeholders (including homebuyers)”, he said.

Ashwinder R. Singh, CEO-Residential, Bhartiya Urban Infrastructure and Land Development Company said, "This remains positive for the real estate sector, “especially for homebuyers who can still afford new homes because of low home loan interest rates.”

“The Housing market has been showing a healthy bounce back from the covid crisis and low interest rates will help in improving affordability and sustaining the growth momentum.  The sustenance of housing market recovery will have a strong multiplier effect on overall economic growth”, said Shishir Baijal, Chairman & Managing Director, Knight Frank India.

According to him, the low interest rate regime has been instrumental in reviving the real estate sector in the last six quarters. “RBI’s efforts, along with other demand stimulant measures, have helped revive demand that had been languishing for close to 7 years prior to 2020. The continuance of the accommodative stance will help further the cause for the sector”, he added.

Welcoming the RBI’s decision, Anuj Puri, Chairman, ANAROCK Group, however, cautioned that the lower rates may not continue for long, implying that people willing to purchase a home should not wait. “While the window of opportunity for homebuyers to avail low interest rates has been extended for some more time, it is unlikely to prevail for much longer - sooner or later, repo rates will rise.”

According to Ramesh Nair, CEO, India & Managing Director, Market Development, Asia at Colliers, this decision comes as a breather for the real estate sector. “In the absence of the specific demand-side interventions from the Budget 2022-23, prospective homebuyers can continue to benefit from lower home loan interest rates which are here to stay for now.”
 

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