New Delhi, May 18, 2022: Soon after the Reserve Bank of India (RBI) raised the repo rate by 40 basis points, the banking sector imitated the same by increasing interest rates in lending and deposit schemes. From major banks to even small finance banks, all joined the bandwagon of raising lending and deposits rate. A number of banks raised their external benchmark based lending rates following an increase of 0.40 per cent in the repo rate – at which the Reserve Bank lends short term money to banks. This move by the banks will impact the growth of the real estate industry and may hit the housing demand.
Mr. Kaushal Agarwal – Chairman, The Guardians Real Estate Advisory said, “The all-time low home loan interest regime had boosted the housing demand and helped the economy to get back to the pre-COVID levels. It also enabled a robust recovery in the real estate sector. Now, the move by the banks to hike the interest rates along with the rise in input cost on construction might temporarily limit the growth momentum of the real estate sector.”
Industry bodies like NAREDCO & CREDAI seeked the intervention of the Government to address the concerns of the real estate sector.
Mr. Pritam Chivukula – Co-Founder & Director, Tridhaatu Realty and Treasurer, CREDAI MCHI said, “The sharp acceleration of interest rates by the banks will affect the homebuyers with concerns of EMI on home loans. The State Government which is the largest beneficiary of housing demand should come forward to support the home buyers by reducing stamp duty rate to 3%.”
Realtors feel that there might be a short-term impact on sales due to the rising property prices further putting the brakes on the overall demand.
Ms. Shraddha Kedia-Agarwal, Director, Transcon Developers said, “We have already started seeing a vertical movement in the home prices due to higher input costs on construction and increased stamp duty. The move by the banks to hike the interest rates will further put a dent on the homebuyer’s sentiments impacting the overall demand.”
“This will impact the investor’s decisions directly as the home loan rates will increase. It will also create a huge impact on the long-term goals by the investors,” comments Dr. Sachin Chopda, Managing Director, Pushpam Group
Mr. Bhushan Nemlekar, Director, Sumit Woods Limited said “It is not very surprising that after RBI, the banks too have increased the interest rates. With the increasing prices of property, this move is a huge setback for the real estate industry disrupting the ongoing growth momentum in the sector.”
“The banks increasing the interest rates on home loans shall impact the homebuying decision going forward. We urge the Government to act upon the situation to support the realty sector in favour of homebuyers,” opines Mr. Jitesh Lalwani – President, Homesync Real Estate Advisory.
Corporate Comm India (CCI Newswire)