Home Loan Rates To Remain Cheaper As Rbi Keeps Repo Rates Unchanged At 4%

Home Loan Rates To Remain Cheaper As Rbi Keeps Repo Rates Unchanged At 4%

It seems interest rates on home loans are going to remain unchanged for some more time now as the Reserve Bank of India in its Monetary Policy Committee (MPC) meeting has decided to keep the policy repo rate at 4 percent.

Based on an assessment of the evolving domestic and global macroeconomic and financial conditions and the outlook, the MPC voted unanimously to keep the repo rate unchanged.

Commenting on this, Dr. Niranjan Hiranandani – MD- Hiranandani Group and National President – NAREDCO said, “The sentiment seems to be quite optimistic with a recurrent accommodative stance by 250 basis point reduction in Repo rate since Feb 2019 even in wake of inflationary pressure. This signals market buoyancy with steady economic recovery; regained momentum in Consumption in the wake of urban job stability leading to increase in private spending. The policy normalization and constant financial infusion is skewed towards healthy economic recovery with a positive GDP outlook pegged at 9.5% for FY 21-22. This will augur investment spurt and credit enhancement to the industry for an uptick in growth yield curve.”

“Increase in the retail home loans segment with less than 2% NPA is symbolic to the fundamental spur in housing demand that offers stability and security in challenging times. Further, the low interest rate will augment the home buying sentiment and facilitate financial cushion to log the deals in backdrop of festive tailwinds. Also, if regulators can enhance credit supply to the stalled projects via permitting more SWAMIH funds; will go a long way in resurrecting the prolonged sluggish real estate market and ensure customer delivery,” he concluded.

The MPC also decided on a 5 to 1 majority to continue with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target, going forward. The marginal standing facility (MSF) rate and the bank rate remain unchanged at 4.25 percent.

Reserve Bank of India (RBI) Governor Shaktikanta Das said, “Today, we are in a much better position than at the time of the MPC’s meeting in June 2021. As the second wave of the pandemic ebbs, containment eases and we slowly build back, vaccine manufacturing and administration are steadily rising. Yet the need of the hour is not to drop our guard and to remain vigilant against any possibility of a third wave, especially in the background of rising infections in certain parts of the country.”

“The MPC met in the shadow of the two recent inflation prints being above the upper tolerance band of the inflation target. It noted that economic activity has broadly evolved on the lines of the MPC’s expectations in June and the economy is recovering from the setback of the second wave,” he added. 

Though the demand for real estate is slwoly witnessing surge yet the sector expects more incentives from the government and the apex bank to boost buyers’ sentiments. As the economy improves, the real estate sector is expected to get benefitted.

“The RBI has maintained an accommodative stance, which is the need of the hour. Post May, the market has started to pick up the pace, and various sentiment surveys are glaringly optimistic. If we merge the sentiment with the upcoming festive season, the market is looking to go upwards. Though we had hoped for an announcement that could further help the buyers make a quick decision to buy, we recognise that the RBI needs to focus on all sectors to achieve economic development. Maintaining the repo rate in real estate will help a lot in terms of retaining buyer sentiment,” said Amarjit Bakshi, CMD, Central Park.

The reverse repo rate also remains unchanged at 3.35 percent. This is the seventh time in a row that the RBI has maintained the status quo. The apex bank had last revised its policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting interest rate to a historic low.

Ravindra Sudhalkar, CEO at Reliance Home Finance explains, “For home buyers, this removes any kind of uncertainty over interest rates as we can expect this accommodative stance to continue for some time. However, planning ahead and negotiating smartly with banks on home loan rates is always advisable.”

The next meeting of the MPC is scheduled during October 6-8, 2021.  

Source : Magic Bricks

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