RBI policy favours home buyers, but experts call for more sops to boost demand

The Reserve Bank of India (RBI)'s decision to keep the interest rates unchanged bodes well for the home buyers. For the seventh consecutive time, the RBI left the interest rates unchanged, with the repo rate fixed at 4 per cent.

The MPC also decided to continue with the accommodative stance as long as necessary to keep the economy afloat amid Covid-19 pandemic and inflation concerns.

Experts in the housing sector believe the unchanged interest rate and thus, the continuing low interest rate scenario, supports the environment of affordability, which has become the new hallmark of the housing market during the pandemic, and even before. They see it as the best time for homebuyers to buy their dream home.

"The unchanged repo rate regime works well for home loan borrowers as the floating retail loan rates, which is directly linked to external benchmark repo rates, have been at the lowest level in the last two decades," says Anuj Puri, chairman - ANAROCK Property Consultants.

As per BankBazaar.com, the lowest  home loan interest rate starts from 6.64 per cent pa, plus the processing fee. The current scenario, says Himanshu Jain, VP -- sales, marketing and CRM, Satellite Developers, offers excellent investment opportunities in the residential segment as affordability is at all-time high.

The reduction in stamp duty charges in some parts of the country, along with the all-time low housing loan rates, have given the much-required fillip to sales activity in the last few quarters. However, industry veterans expect additional measures from the government and lenders to boost demand in the sector now. They need banks to support the sector by providing additional liquidity.

Also read: RBI ups FY22 CPI inflation outlook to 5.7%

"The banks should now sweeten the lending rates further, at least till such time that the economy gets back to the pre-Covid levels," says Kaushal Agarwal, chairman, The Guardians Real Estate Advisory.

The ongoing pandemic has altered the investor behaviour and requirements as well. According to Housing.com and NAREDCO survey, while real estate stood as the most preferred asset class during the covid time,  a majority (71 per cent) of homebuyers want discounts, along with flexible payment options, as an incentive. Flexible payment plans and discounts will provide much-needed financial aid during current times and drive them to make purchase decisions," reads the survey.

Also Read: MPC meet: RBI retains GDP projection at 9.5% for FY22

Some experts believe a rate cut would have further improved the liquidity situation, which is vital for the real estate sector.  As per Lincoln Bennet Rodrigues, Founder and Chairman, Bennet & Bernard Group, while the consumer is enjoying low home loan rates currently, a cut would have further intensified demand. A continuation of the low interest rates regime works well for borrowers. "There is a need for stimulant policy measures that would enhance and ease credit provisions and increase buyer's confidence. Any announcements in these forms would have been appreciated," he adds.

Rodrigues also expects a lower stamp duty and registration charges in the near future to see an enhanced demand in the real estate sector.

Also read: RBI MPC outcome highlights: Central Bank maintains status quo on rates, says priority is to ‘nurture growth’