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Repo rate maintains status quo, homebuyers rejoice

By Rishabh Chamoli | 2023-04-06

The Reserve Bank of India (RBI) in its latest Monetary Policy Committee (MPC) has maintained the repo rate at 6.50 percent. Although the last six consecutive repo rate hikes during Financial Year (FY) 2022 to 23 are believed to have deterred potential homebuyers from investing in property, the current stand may positively impact home buying sentiment and sales.

The Reserve Bank of India (RBI) has kept the repo rate consistent at 6.50 percent from the last round of increment on February 8, 2023. With six consecutive hikes totalling 250 basis points (bps) in the Financial Year (FY) 2022 to 23, the apex bank took steps to contain the inflationary pressures on the economy. However, the RBIs current neutral stand is a welcome move as it would provide some much-needed respite to homebuyers and encourage them to invest in the sector.

Industry experts had anticipated another 25 bps rise in the repo rate during the first Monetary Policy Committee (MPC) meeting of FY 2023 to 24, pushing a section of prospective homebuyers to defer immediate plans to purchase property and opt for rental accommodation over the next few quarters. In contrast to that, the current decision is expected to contain the rising home loan interest rates, thereby increasing the homebuying appetite. Consequently, the Equated Monthly Instalments (EMIs) may remain stable for some time, until the RBI announces any further upward revisions.

Samyak Jain, Director, Siddha Group, shares, The RBIs decision to keep the repo rate unchanged at 6.50 percent is in line with consumer sentiments. The real estate sector will see increased demand for housing whilst keeping inflation in check. This would also help in bringing more liquidity into the sector thus balancing growth.

Housing loan rates Current status
The last six rounds of increases in policy rates starting May 2022 have impacted the lending rates. The previous increment had risen the housing loan rates to up to nine percent from the decadal low of 6.6 percent during the pandemic. However, experts now believe that RBI may continue its neutral stand to allow the inflationary pressures to subside. Until the apex bank announces any further revisions, home loan interest rates may stabilise for the first time in the past few months providing a golden opportunity for homebuyers to close their housing deals.