Impact of unchanged Repo Rate on Real Estate Sector

With an unchanged repo rate at 5.15%, there is no outward relief in sight for the real estate sector. Home loan EMIs linked to external benchmark rates will remain unchanged, with no softening of home loan rates and ultimately, no boost in housing sales. There were five successive repo rate cuts in 2019 to bolster growth and infuse liquidity into real estate, but this time around, the MPC adopted a cautious approach.

Keeping a close eye on the inflation trajectory, the RBI needs to take complete account of the trickle-down effects of the past rate cuts, before it can take a decision on introducing further repo rate reduction. Being an interest-sensitive sector, the RBI’s decision to not lower interest rates have come as a disappointment to the real estate industry.

Mr Pradeep Aggarwal, Chairman – ASSOCHAM National Council on Real Estate, Housing and Urban Development, Founder and Chairman – Signature Global India Pvt. Ltd. said, “The rate cut would have been the need of the hour to provide the much-needed boost to the real estate and to facilitate the growth of the sector. However, the real estate, in particular, has been benefiting through policy interventions to stabilize the market. The country has a large number of potential buyers and any rate cut would have incentivized to improve their confidence. We look forward to the RBI’s decisions to lower rates in the future that will contribute to strengthening the GDP growth and create a robust economic framework.”

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