RBI’s repo rate pause likely to help sustain housing sales momentum
Reserve Bank of India's decision to keep the repo rate unchanged for the fifth successive time at 6.5% is expected to support the housing property market and help sustain a consistent trajectory of growth in home sales.
The prevailing momentum in mid-income and premium housing sales is expected to persist, whereas affordable and low-income housing, sensitive to interest rates, may experience a subdued pace.
Responding to the inflationary environment, the central bank, through six successive increases since May 2022, had raised policy rates by a cumulative 250 basis points, taking the repo rate to 6.5% before hitting the pause in April. Following this, home loan rates are already hovering around 9% from a record low of 6.6% a year ago.
“Both residential and commercial real estate markets may benefit from stable interest rates.
By keeping borrowing costs low, stable interest rates can make it more affordable for individuals and businesses to purchase properties. This can result in increased demand for residential and commercial properties, stimulating the industry.
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