Mumbai: The real estate experts cheered the Reserve Bank of India (RBI) decision to keep the repo rates unchanged at 6.5%. India continues to outperform other countries in terms of consumption and with the festive season coming up, the RBI will no risk denting it.
Real estate sector believes that home loan interest rates will be steady as long as the RBI did not hike the repo rate. The move is also likely to drive housing sales momentum. But for how long can home loan EMIs can bear the status quo is the real question that we need to be asking ourselves.
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Shiwang Suraj, founder & director of InfraMantra said, “Homeowners would be relieved for the time being by the Reserve Bank of India’s most recent decision to retain the status quo on the repo rate. Home loan rates will remain steady if the repo rate is not increased. It might also aid in addressing a different rupee-related difficulty.”
This is nothing but good news for aspiring homebuyers on the market for a purchase in the near future. The unchanged repo rate will help maintain the momentum in housing sales-particularly in the mid and luxury segments, which did significantly well in H1 2023, said Anarock group chairman Anuj Puri.
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Along similar lines, Vimal Nadar, head of research at Colliers India said, “As home loan rates are already at elevated levels of 9% and above, this is a significant breather for lenders, developers & homebuyers. First-time homebuyers will be better placed to make their home-buying decision in a stable lending rate regime. Fence sitters in the affordable & mid segment will have greater visibility of their EMIs & thus effect buying.”
Homebuyers’ miseries for high interest on loan continue
As per Anarock Research, the total housing sales of 2.29 lakh units across the top seven cities in H1 2023, the highest half yearly sales in the last decade. “However, the risk of inflation continues to lurk and if it rises further, there could be some repercussions on overall sales, especially in the cost-sensitive affordable housing segment which has already been severely impacted by the pandemic over the last couple of years,” said Puri.
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Amidst the rising cost of these properties and the cumulative 250 bps rate hikes by the RBI in the last one year and more, affordable housing buyers have taken the severest blow. Homebuyers’ EMIs jumped up by 20% in the last two years. Home loan borrowers who were paying an EMI of ₹22,700 in July 2021 are now paying ₹27,300-an increase of ₹4,600 per month.
This 20% increase in the EMI has resulted in a jump of ₹11 lakh in the overall interest component-from ₹24.5 lakh interest payable in 2021 to ₹35.5 lakh today. The total interest payable over a 20-year tenure is now more than the principal amount.
