RBI hikes repo rate: How real estate developers reacted

Chandigarh: RBI today increased the repo rate by 50 BPS and the lending rate to 5.9 per cent intensifying its fight against persistently high inflation.  A 50 bps increase in the repo rate this week is the fourth consecutive hike since May. The MPC has raised the policy repo rate by 140 basis points since May to curb inflationary pressures. 

The consumer price index (CPI) based on retail inflation,  which had started showing signs of moderation since May, has again firmed up to seven per cent in August. The repo rate at which the RBI lends short-term funds to banks rose from 5.40% to 5.90%. This is the highest level since April 2019. This has evoked a mixed bag of feelings among real estate developers. While most agreed that the hike was moderate, their views diverged on the actual impact on the buyers at a time when buyers were warming up towards investing in real estate.

Prateek Mittal, Executive Director, Sushma, said “Decision of RBI has introduced a hike of 50 basis points withinside the repo rate with the purpose to cushion the effect of inflation. The rise in repo rates from 5.4% to 5.9% is quite effective and it could be stored beneath as it’s far much less in comparison to different components of the sector which are experiencing an equal situation. The hike become pretty expected, and the RBI has controlled it magnificently with the aid of using rolling out a marginal difference. This alternate could make an effective effect on the homebuyers overall.”

Tejpreet Singh Gill, MD, Gillco Group said, “Global trends and domestic inflations together have led to an increase in repo rates. However, RBI has managed it quite well by rolling out a minor hike of 50 basis points. This will bring a slight pause to buying, but the real estate sector won’t suffer any downward trend as the festive season is around the corner and buying’s at its peak across all segments. The economic strength of buyers is increasing, and they would curb this marginal hike easily.”

LC Mittal, Director, Motia Group said, “RBI has announced a rise of basis points in repo rates, jumping from 5.4% to 5.9%. Though this will bring an increase in home loan interest rates, the change would be minimal and would not have any lasting impact on the buyers. The buyers are emerging with a stronger economy, depicting their efficient buying capacity. This would hardly bring any wrath to them, owing to the marginal increase. This decision by the government will bring overall stability to the real estate sector.”