The RBI’s decision to hike the benchmark interest rate will make home loans costlier and affect housing sales, especially in affordable and mid-income segments, according to property consultants.
The RBI on Wednesday hiked the key benchmark rate by 50 basis points.
Property consultancy firms Anarock, Knight Frank India, JLL India, Colliers India, India Sotheby’s International Realty and Investors Clinic said that the RBI’s move was on the expected line to control inflation and this would result in an increase in interest rates on home loans.
Anarock Chairman Anuj Puri said: “The rate hike will push up home loan interest rates, which had already begun creeping upward after the surprise monetary policy announcement last month.”
Interest rates will remain lower than during the global financial crisis of 2008 when they went as high as 12 per cent and above, he said.
“Nevertheless, the current hike will reflect in residential sales volumes in the months to come, more so in the affordable and mid-segments,” Puri pointed out.
He noted that the housing market is still largely end-user driven. “So, there is no investor mindset seeking the lowest possible entry point. Genuine demand comes from an underlying aspiration for homeownership,” he observed.
Puri said the hike in repo rate was inevitable. “...but, we are now entering the red zone. Any future hikes will reflect markedly on housing sales,” he added. Anshuman Magazine, Chairman & CEO - India, South East Asia, Middle East & Africa, CBRE, said, “We believe that this decisive action will go a long way in curbing mounting inflation levels in the medium term.”