The Reserve Bank of India (RBI) has kept the repo rate consistent at 6.50 percent as per the August 8, 2024 meeting. The apex bank has not announced any repo rate revisions since the beginning of the Financial Year 2023-24, marking this the ninth consecutive time this decision is rolled out. The Monetary Policy Committee (MPC) has tried to cushion the inflation for end-users during its past meetings, concluded on June 7, April 5, February 8, 2024, April 6, June 8, August 10, October 6, and December 8, 2023 respectively. The last round of increment was announced on February 8, 2023.
With six consecutive hikes totaling 250 basis points (bps) during FY 2022-23, the apex bank took steps to contain the inflationary pressures on the economy. However, the RBI's current neutral stand is a welcome move as it is expected to provide some much-needed respite to homebuyers and encourage them to invest in the real estate sector.
Repo rate: Experts speak
Industry experts had first anticipated another 25 bps rise in the repo rate during the first Monetary Policy Committee (MPC) meeting of FY 2023-24, pushing a section of prospective homebuyers to defer immediate plans to purchase property and opt for rental accommodation over the next few quarters.
In contrast to that, the repo rates remained unchanged throughout FY 2023-24 and the latest meeting for FY 2024-25 continued to have a similar stance. The current stand is expected to put a halt on the rising home loan interest rates, thereby increasing the homebuying appetite. Consequently, the Equated Monthly Instalments (EMIs) may remain stable for some time, until the RBI announces any further upward revisions.
Also Read: How does repo rate impact home loan EMIs?
Mr. Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd shared his thoughts on RBI policy review, "The RBI's decision to keep rates unchanged aligns with its goal of controlling inflation. By maintaining the current rates, the RBI aims to keep inflation within its target range. However, the anticipation of a good monsoon season may prompt the central bank to lower interest rates in the coming months. Such a move would likely boost real estate sales momentum and provide potential homebuyers with a favourable opportunity to enter the market. Additionally, while the RBI's strategy is focused on economic stability, its comprehensive efforts are expected to positively impact homebuyer sentiment and the overall real estate industry. This approach not only supports economic growth but also strengthens confidence in the housing market."
Mr. Yashank Wason, Managing Director, Royal Green Realty, remarks, "The RBI MPC's decision to keep the repo rate at 6.5 percent for the ninth consecutive time reflects a strong commitment to economic stability. This decision is vital for the housing market, which has shown robust performance recently. By maintaining the repo rate, the RBI ensures continued confidence among homebuyers and provides a stable environment for home loan borrowers. This consistency will support the ongoing growth of the real estate sector, positively impacting India's GDP and contributing to a favourable economic outlook."
Mr. S.K Narvar, Group Chairman, Trident Realty opined on the matter as well, stating, “We as a real estate developer appreciate the decision to keep the repo rate unchanged, as has been the trend for the past ninth time. This stability is crucial in our current economic environment which has a relatively constant inflation and high GDP growth rate for investment in real estate. It reflects confidence in our market, encourages both buyers and developers to engage in long term investment that results in stability of the market. Since financing costs tend to remain stable, we are optimistic about the opportunities that lie ahead. This consistency not only creates a positive environment for homeownership but also strengthens our mission to provide sustainable properties that adapt to the changing needs of societies.”
Aman Trehan, Executive Director, Trehan Iris, says. "The RBI’s decision to maintain the repo rate at 6.5 percent for the ninth consecutive time is a commendable move that balances inflation control with economic growth. We, as real estate developers, are encouraged by this move as it supports affordable homeownership and enhances market confidence. Moreover, the unchanged repo rate encourages more buyers to invest in their dream homes, particularly in the luxury sector. Additionally, this steady financial environment enables us to continue delivering exceptional living spaces and drive innovation in real estate, ultimately enriching community living and strengthening the housing market."
Also Read: Repo rate 2024-25: A complete timeline
Housing loan rates: Current status
The last six rounds of hikes in policy rates starting May 2022 had an impact on the lending rates. The increment had risen the housing loan rates to up to nine percent from the decadal low of 6.6 percent during the pandemic. However, in light of recent developments, experts applaud RBI’s neutral stand to allow the inflationary pressures to subside. Until the apex bank announces any further revisions, home loan interest rates may stabilise providing a golden period for homebuyers to close their housing deals.
