Mumbai: Real Estate Sector Embraces RBI’s Stable 6.5% Repo Rate, Anticipates Boost in Home Sales
The real estate sector in Mumbai has welcomed the Reserve Bank of India’s decision to maintain the repo rate at 6.5%, seeing it as a positive move for home sales during the festive season. Stable interest rates are expected to keep EMIs manageable, encour
Real EstateRbiRepo RateHome LoansMumbaiReal Estate MumbaiOct 09, 2024
With interest rates remaining steady, equated monthly instalments (EMIs) for home loans are anticipated to remain manageable. This should encourage both current and prospective homeowners to make purchasing decisions, thereby providing a positive outlook for the housing market.
While some developers believe that a slight cut of 25 basis points could have further energized the market and boosted sentiment, they agree that the current approach is prudent and aligns with the broader goal of economic stability. Dr. Niranjan Hiranandani, Chairman of NAREDCO and Hiranandani Group, commented, “Given the longer cycles in the real estate sector, the current northbound momentum is expected to continue. With India’s projected GDP growth at 7.2%, the demand-supply dynamics are expected to remain healthy. The increasing appetite for homeownership, interest in luxury homes, and rising investments in real estate assets will further sustain strong demand in the sector.”
Prashant Sharma, President of NAREDCO Maharashtra, highlighted the importance of this decision for the real estate sector. “The maintained policy rate signals a steady interest rate environment, which can help sustain the ongoing demand for home loans. As the sector gears up for the festive season, this decision is poised to support housing demand and investment momentum.”
Developers also see the RBI’s decision to keep repo rates unchanged while shifting its stance to 'neutral' as a positive move. This aligns with global trends where many central banks have reduced interest rates. Kaushal Agarwal, Director and Co-Founder at The Guardians Real Estate Advisory, stated, “This is good news for home loan borrowers, as their EMIs will remain constant for now and may even decline in the near future. First-time buyers can plan better without the concern of rising interest costs.”
Gauri Tandle, CFO at Ashwin Sheth Group, emphasized the benefits for mid-range and luxury residential offerings. “The stability in home loan interest rates will foster consumer confidence, enabling buyers to invest in properties without the fear of rising interest rates. This aligns with developers' long-term interests, as it helps maintain a positive consumer sentiment and ensures that project launches continue unabated, enhancing investment attractiveness.”
For the real estate sector in the Mumbai Metropolitan Region (MMR), the decision is particularly crucial. Domnic Romell, President of CREDAI-MCHI, noted, “Maintaining the current borrowing costs for both homebuyers and developers ensures consistency and predictability in the market. Since the repo rate directly influences loan interest rates, this decision ensures that home loan EMIs remain steady, offering relief to both first-time buyers and investors in a market where affordability is a constant challenge.”
Hitesh Uppal, Head of Finance at Magicbricks, added that while stable rates create a favourable borrowing environment, boosting market confidence and helping control inflation-related cost pressures, they may also temper expectations for more affordable financing, which could slow buyer momentum in the long run.
Overall, the real estate sector in Mumbai sees the RBI’s decision as a positive step, providing the necessary stability to encourage home sales and investment during the festive season and beyond.
Frequently Asked Questions
What is the current repo rate maintained by the RBI?
The Reserve Bank of India (RBI) has maintained the repo rate at 6.5% for the 10th consecutive time.
How does a stable repo rate affect home loan EMIs?
A stable repo rate keeps home loan EMIs manageable, which encourages both current and prospective homeowners to consider purchasing homes.
What is the projected GDP growth for India according to the article?
India's projected GDP growth is 7.2%, as mentioned in the article.
How does the RBI's decision impact first-time home buyers?
The RBI's decision to maintain repo rates ensures that EMIs remain constant, making it easier for first-time buyers to plan their purchases without the concern of rising interest costs.
What is the importance of the repo rate for the real estate sector in the Mumbai Metropolitan Region (MMR)?
The repo rate directly influences loan interest rates, ensuring that home loan EMIs remain steady and providing relief to both first-time buyers and investors, which is crucial for maintaining consistency and predictability in the market.
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