If you’ve taken out a home loan or are planning to take one out in the near future, here’s good news for you. As widely expected, the RBI on Wednesday maintained the status quo on key rates in its December monetary policy. While no change in the reverse repo rate was expected, it was possible that the reverse repo rate could be raised, which also did not happen.
Commenting on the same, Anuj Puri, Chairman of ANAROCK Group, said: “With Omicron casting a shadow of doubt across the world and in India, the RBI has decided to keep the repo rate at 4%. and the repo rate at 3.35. %. It was expected, and this is the ninth consecutive time that the RBI has maintained the status quo amid current uncertainties. “
The unchanged repo rate will help maintain the status quo on the current low interest rate regime for some time to come. “It works well for all mortgage borrowers as the affordability environment will continue,” Puri added.
In fact, the RBI’s decision to keep repo and reverse repo rates at 4% and 3.35% came at a time when economies around the world are preparing to face uncertainties due to the Omicron variant of COVID-19.
“While keeping an eye on inflation levels, the RBI always focuses on ensuring sustainable and self-sustaining economic growth, thus emphasizing the importance of political support. Moreover, on the basis of positive domestic indicators such as improving consumer demand, resumption of investment activity and subdued inflation, the central bank kept its previous GDP growth projections at 9.5% during the 2021-22 financial year, despite some downside risks. Therefore, we are optimistic that this stable position would bode well for mortgage borrowers and the Indian real estate market, ”said Anshuman Magazine, Chairman and CEO, India, Southeast Asia, Middle East and Africa , CBRE.
The ongoing trade-off between growth and inflation has also forced the banking regulator to follow a cautious path.
“Even though the economic indicators reflect a positive trend, interest rates should be kept at current levels in order to continue to stimulate growth and stimulate demand in the real estate sector, a key contributor to economic growth in India. While home sales have steadily improved over the past two quarters, much of this can be attributed to the record interest rate regime. Shaking up the current momentum would have been very damaging to the global economic recovery, ”said Dhruv Agarwala, group CEO, Housing.com, Makaan.com and Proptiger.com.
Welcoming the RBI’s status quo on policy rates, Amit Goyal, CEO of India Sotheby’s International Realty, said: “This means that the mortgage interest rate will remain at the current level of less than 7% per annum. In addition, the governor rightly said in his statement that the recent reduction in excise duties and state VAT on gasoline and diesel would support consumer demand by increasing purchasing power. We expect demand in the housing market to improve further. All eyes are now on the next budget. This will boost the real estate sector if the government increases deductions on home loans in the 2022 budget. “
Industry experts have said this accommodative stance will foster demand dynamics and propel economic growth to mitigate the impact of Covid-19.
“This will support the RBI’s vision of 9.5% GDP growth for the year. At the same time, growth will also depend on the new variant of Covid-19 and its impact. The unchanged repo rate will continue to improve sentiment in the real estate industry. The housing sector is already experiencing a sales recovery, driven by low mortgage rates, pent-up demand and stable prices, ”observed Ramesh Nair, CEO-India and Managing Director, Market Development-Asia, Colliers.
It might also be a good time to buy your dream home, as interest rates are currently at an all time high and the situation might not stay the same in the future.
Suren Goel, Partner, RPS Group, said: “The RBI’s decision to maintain the status quo on interest rates means that mortgage rates will continue to remain at an all time high. This bodes well for the housing industry and the real estate industry as a whole. With reasonable prices, lower interest rates, and sufficient choice, perhaps now is the best time to buy a dream home and we hope to see an increase in demand.