RBI’s status quo ensures festive season joy for homebuyers

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The Reserve Bank of India on Friday kept the key rates unchanged, signalling the continuation of a low home loan interest rate regime for homebuyers. According to experts, the Monetary Policy Committee decision will help to boost sales during the festive season. As per the estimates of Anarock, the ongoing festive quarter will see at least a 35-40% annual rise in overall housing sales across the top 7 cities.

“As expected, RBI maintained the monetary policy pause, keeping the repo rate unchanged at 4% and reverse repo rate at 3.35%. In short for homebuyers, the low home loan interest rates regime will continue in the market and help foster housing demand during the ongoing festive season. Notably, this is a period when housing sales usually surge on the back of attractive offers by developers and lending banks.

“The green shoots of economic revival coupled with the prevailing low-interest rates will be conducive for the residential sector in the short to mid-term. Anarock Research indicates that we may see at least 10-15% growth in housing demand in the ongoing festive period (Oct.-Dec) across the top 7 cities against the preceding quarter. In Q3 2021, the top-7 cities saw total housing sales of nearly 62,800 units – already the best quarterly sales since the pandemic,” said Anuj Puri, Chairman – Anarock Group.

Ramesh Nair, chief executive officer, India and market development, Asia, Colliers, agreed, “For the 8th consecutive time, the Reserve Bank of India has kept repo rates unchanged at 4%. We predicted that the repo rate will remain constant to boost consumption in the ongoing festive period. It will go a long way in steering housing sales. Several banks have already lowered their home loans rates by a stable repo rate since September 2021. Overall, it is a good time for homebuyers who can avail of low home loan rates, along with the steady price.”

The RBI Governor also announced signals about the recovery in the service industry, particularly in the IT services. With the increase in the expected GDP growth target and possible softening of inflation in the near term can be a big positive for the housing sector. Amit Goyal, CEO, India Sotheby’s International Realty said, “We welcome RBI’s status quo on policy rates. This will mean a continuation of low home loan rates, which will keep the demand momentum for homes going. In the past couple of months, we have witnessed a further reduction in interest rates of home loans to 6.5% per annum by leading financial institutions.”

Ramani Sastri, chairman and MD, Sterling Developers, said ” For home buyers, this decision will help reinstate confidence and further access to affordable home loans. It also goes without saying that the real estate industry’s perennial hope is fixed on lower interest rates as it improves affordability. Home loan interest rates have already gone down substantially in the recent past, and are presently at an all-time low and property prices have been stable. Hence this is the right time for prospective home buyers to invest. Homebuyers will continue to take advantage of the lowest ever home loan interest rates. The move to reduce interest rates by few banks recently is encouraging and will pave path for robust housing demand further. We are seeing a lot of first time home buyers, who were not able to reach a decision in the previous quarters due to the lockdown are eager to conclude the deal now. There is a healthy stock of ready to move in and nearing completion inventory and that will likely be of high interest during the festive season.”

Festive season joy

The upcoming festive season, which is considered auspicious by a large number of Indians to make big-ticket purchases, the timing of a reduction in interest rate by banks recently couldn’t have been better and will lead to a substantial increase in sales.

“The low-interest rate regime is going to be a game-changer for the whole real estate sector especially at a time when the economy is on a recovery trail. For any investor, it’s a time of great opportunity and for the end-customer, it’s a good time to buy. While the impact of Covid 19 has been high on specific segments, the luxury and second home sentiment has not been impacted as much. We hope that the government continues to pay attention to the requirements of the sector, which is one of the largest employers in the country. We would also like to see measures to enhance demand in the real estate sector by lowering of stamp duty and registration charges in the near future, said Lincoln Bennet Rodrigues, Chairman & Founder, The Bennet and Bernard Company.