UNCHANGED RBI REPO RATE IMPACT
‘The status quo on the key policy rates was a relief for the real estate industry though it hoped for a reduction that could bring cheer to the homebuyers in the coming New Year.
In retrospect, the RBI maintaining repo rate at 6.5% will not have any serious impact, though falling crude prices and moderate economic growth indicated a rate cut, Real estate being a critical driver of India’s economic growth could have used a booster shot to heighten the market momentum.
The real estate sector worried over a possible rate hike welcomed with a sigh of relief the Monetary Policy Committee’s decision of keeping the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.5 per cent. Surely, with the New Year coming in, this move will attract more home buyers as the interest rates on home loan will remain unchanged. As Manju Yagnik, Vice Chairperson, Nahar Group rightly mentioned that there has been no change in the repo rate twice in a row now which seems like a well-thought-out move by the RBI and this will result in a win-win situation for both developers and buyers.
Dr. Niranjan Hirandani- National President –NAREDCO further briefed that with the intent to encourage banks to lend more, RBI has also announced that it will reduce the SLR by 25 basis points every calendar quarter until it reaches 18 percent, which is another positive.
Certainly, most of the experts agree that the decision to keep the Repo Rate unchanged by 5 out of 6 members of the monetary policy committee of the RBI is in line with the market expectation considering stable inflation outlook. But many feel disappointed by the development for the following reasons: • Home buyers are reeling under the GST and Stamp Duty hike • Banking and financial services industry is facing liquidity crunch • Many Banks and housing finance companies have already increased their MCLR and lending rates
Jaxay Shah, President, CREDAI National rightly contends that what the real estate industry was looking forward to is availability of credit following the NBFC crisis. He stated, “The policy is comforting in the sense that RBI has acknowledged the issue and is ready to support NBFCS and Housing Finance Companies. Real estate industry eagerly awaits these intentions translating into positive action from the RBI in the near term.”