Over the past three months, the apex bank has increased the repo rate by 1.40 percentage points to 5.40%, well above the pre-pandemic level of 5.15. %. Banks also followed the RBI rate hikes and adjusted their lending rates accordingly. Now, with this hike, consumers will be hit even harder, as their interest rates on loans have already been raised several times over the past few months.
Real estate players believe that the subsequent transmission of rates by banks should begin to slow the pace of growth in residential real estate.
RBI is increasing the repo rate by an additional 50 basis points. Will FD rates continue to rise from here?
RBI Raises Repo Rate by 50bps to 5.4% to Tame Inflation; house, consumer loans become more expensive
Following May’s surprise repo rate hike, mortgage rates have already risen from all-time lows that have helped major property markets rise above pre-Covid levels and record record sales , according to an ET report. With interest rates tightening, real estate agents will now have to provide offers to stimulate and maintain demand momentum.
For consumers who were paying an interest rate of 6.7% before May – the month RBI raised the rate by 40 basis points, some banks have already raised that rate to 7.8%. With this third upward revision of the repo rate by the RBI, banks are expected to raise their rates further in the coming days.
India’s residential sector is in the midst of a prolonged and sustained growth cycle very similar to the 2010-2012 period, but more driven by actual market fundamentals in terms of homebuyer demand, according to the ET report. In fact, sales in the first half of 2022 (January-June) were the highest in more than a decade over the same period of comparison and just after the first half of 2010.