The Reserve of India (RBI) on Wednesday keeping the repo rate as it is at 6.5% after the decision of its monetary policy meeting declared and moved its position from accommodative to neutral.
The current objective of RBI is to keep the inflation within its target rate of 4%. In this context of global economic challenges, the main focus remains on holding inflation and gradually reducing repo rates.
Home-buyers are enthusiastically waiting for a reduction in the loan interest’s rates for a longer period of time.
The RBI did not change the repo rate since the month of February and focus is towards the central bank for potential reductions following the recent trend of 50-basic point cut by the US Federal Reserve. But the current inflation pressures in India which is unlikely that the RBI will implement any cut rates in the next term.
The CEO of Bank Bazar.com Adil Shetty says that the RBI is keeping the repo rate unchanged at 6.5% that turns out to be good news for inflation control. The repo rate will now remained unchanged at 6.5% for nine consecutive Monetary Policy Committee ( MPC) meetings after a year hike of 250 basic points since 2022 .The RBI is keeping their position as it is. It means either they are ready to act depending o how things unfold. But for now we just need to wait and watch.
Loan holders are eagerly waiting for rate cuts possibly until the month of December. If inflation comes under control, then possibly there will be rate cuts.
Talking about down payment, the smart way to manage high interest is by making larger down payment during the time of purchasing the property.
Collateral loans such as fixed deposits, gold or mutual funds can also help the finance while buying the property or making the larger down payment.
By using the option of prepayment, either by paying more than the regular EMIs or making lump sum payment towards the principal amount can significantly reduce the overall cost interest.
Balance Transfer basically involves shifting from existing loan to other lender while offering a lower interest rates or more favorable terms.
Predominantly these are few tips for the home-buyers who can manage their respective home loans productively especially when loan rates are high.
Responding to this, Anuj Puri, Chairman - ANAROCK Group says,
With the fundamentals of the Indian economy remaining strong despite global headwinds, geopolitical tensions and inflation well within control, the RBI has once again decided to keep the repo rates unchanged at 6.5% - thus helping the housing market to maintain momentum during the festive season. While a repo rate cut would have been preferable, it is clear that the RBI is on a tightrope walk and must keep various macro-economic factors in mind.
From the point of view of homebuyers, the relatively affordable home loan interest rate regime will continue at a critical time for the Indian housing market - the festive season - amid rising housing prices and tapered sales. Q3 2024 saw average housing prices rise by a cumulative 23% in the top 7 cities even as average prices in these markets collectively rose to approx. INR 8,390 per sq. ft. by Q3 2024-end, from approx. INR 6,800 per sq. ft. in Q3 2023.
Housing sales also declined to an extent in Q3 2024, even as prices rose. As per ANAROCK data, Q3 2024 saw residential sales go down by 11% annually against Q3 2023. New launches also fell by 19% in this period.
The unchanged home loan rates are much-needed demand support in the ongoing festive quarter. We are expecting faster sales momentum in Q4 2024 when compared to the preceding quarter. This year's festive quarter may see similar demand to that seen in this period a year ago, if not higher. Over 1.27 lakh units were sold across the top 7 cities back in Q4 2023. Unchanged interest rates will play and important role in achieving and maintaining this momentum.
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