Builders Reaction On Repo Rate Hike By RBI

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Pune/Mumbai, 8th February 2023: Reserve Bank of India (RBI) has increased the repo rate by 25 bps to 6.5%.

Rohit Gera, Managing Director, Gera Developments, said, “The increase of 25 bps is an indication of a moderation in the tightening by the RBI. The increase in interest rates has affected the total loan eligibility of prospective home buyers. The impact however has been blunted because The cost of homes has not risen as much as salaries have over the last 5 to 7 years. This has led to an overall increase in affordability, part of which is being taken away by the increase in interest rates. Hopefully, this is the end of the tightening cycle as inflation comes under control.”

Samyak Jain, Director, Siddha Group, added, “The RBI has come far from synchronised rate hikes in its policy, as inflation outlook is beaming. Attempting to taper inflation, the hike in the repo rate, much to expectations, will force the banks to increase lending rates impacting the quantum of home loans off-take and pushing EMIs upwards. The EMI-driven housing market will thus have a cumulative effect and gradually impact the sales velocity in the Real Estate market in the times to come. A lesser repo rate hike would have helped tackle inflation, yet managing growth. Mumbai’s Realty market, which has already sustained increased interest rates earlier, will further get impacted for the homebuyers in the pricing category of Rs 1 crore and above.”

Ali Kochra, Chairman & Managing Director, Kochra Realty : “The consistent increase in repo rate over the last two policies has been done to keep the inflation in check. It is unlikely to have a major impact on the overall real estate sector as it’s been doing well. If the home loan interest rates increase correspondingly, it might hamper the home buyers sentiments in the short term. Though the new tax regime introduced in the recent budget announcements have provided major relief to tax payers and hopefully will encourage housing sales”