Repo rate rising again, homebuyers may delay agreements.
The Reserve Bank of India (RBI) has raised the repo rate for the fifth time in a row by 35 basis points (bps). According to experts, this may cause prospective homeowners to postpone their immediate intentions to purchase in property and instead choose for rental lodgings over the following several quarters. Read on to discover how the latest raise may affect house purchasing mood and sales.
The Reserve Bank of India (RBI) announced a repo rate hike of 35 basis points (bps) on December 7, 2022, bringing the total boost to 225 bps in 2022 and the repo rate to 6.25 percent. Soon after the latest increase on September 30, 2022, two large mortgage lenders, LIC Housing Finance and Housing Development Finance Corporation, declared rate increases, and others jumped on the bandwagon. According to industry analysts, the new revelation may cause some prospective homeowners to postpone their immediate intentions to purchase property and instead choose for rental housing in the coming quarters.
Whereas the rise in interest rates has not had a significant impact on property sales thus far, it may begin to do so immediately. Higher house loan interest rates may raise homebuyers’ Equated Monthly Instalments (EMIs), limiting the pace of residential real estate expansion.
What do the industry insiders say?
Amarendra Sahu, Founder and CEO, NestAway Technologies, commented, “The house mortgage rates are now returning to pre-COVID levels or even higher. This is expected to boost momentum in the rental market. Renting will become significantly more affordable when property prices and interest rates rise. Also, homebuyers will most probably wait for the present cycle to end”.
Current state of housing loan rates
Five rounds of policy rate rises have had an influence on lending rates. The last increase had pushed mortgage rates up to 8.4 percent, from a decadal low of 6.6 percent only a few months ago. Experts foresaw the current rise and foresee another one by March 2023, raising interest rates beyond 9% and severely influencing house ownership appetite and, ultimately, housing demand.
Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.
