Maintaining an accommodative stance, the Reserve Bank of India’s Monetary Policy Committee (MPC) kept the repo rate and reverse repo rate unchanged at 4% and 3.35%, respectively. This is the seventh consecutive time that the RBI has maintained the status quo on policy rates.
RoofandFloor spoke to the industry stalwarts to get their perspective on this latest development. Here’s a snapshot:
An accommodative stance
The RBI and especially the MPC are to be commended for maintaining an accommodative stance for the seventh consecutive time now. Their approach towards tackling the situation created by the pandemic and steps taken to help revive the economy will go down in history as being one of the finest.
“The reduction in stamp duty charges in some parts of the country with the all-time low housing loan rates have given the much-required fillip to sales activity in the last few quarters. The expectation amongst stakeholders of the industry is that the banks should now further sweeten the lending rates, at least till such time that the economy gets back to the pre-COVID levels,” said Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory.
Explaining the same, “Sandeep Runwal, Managing Director, Runwal Group, President-Elect, NAREDCO Maharashtra said, “The RBI has declared the accommodative policy stance amid the fears of the expected third wave of the pandemic yet again. Low mortgage rates would continue for at least some more time now or maybe until the end of the year. This will provide the required fuel for the growth of the economy along with the real estate industry with which several other allied sectors are linked.”
Positive for the residential market
The RBI did confirm that economic activity is reviving with the ebbing of Covid-19 in most states across the country. Also, “the real GDP forecast for the FY 2021-22 remains at 9.5% in the wake of the vaccination drive that is in full swing in India. All this is positive for the residential market, which has strong correlations to the overall state of the economy,” said Anuj Puri, Chairman – ANAROCK Property Consultants.
Good for home loan borrowers
Home loan borrowers can continue to enjoy the benefit of low-interest rates for some more time to come.
“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. The continuation of this low-interest rate regime supports the environment of affordability, which is the new hallmark of the housing market – during the pandemic, and even before,” added Anuj.
Reiterating the same, Ashish R. Puravankara, Managing Director, Puravankara Limited said, “The continued accommodative stance by RBI to keep the repo rates unchanged has been a catalyst for the revival of the real estate sector. The decadal low-interest rates have helped sustain homebuyers’ interest in the residential segment, positively impacting the overall demand over the last two quarters.”
Further, “The low interest rate will augment the home buying sentiment and facilitate financial cushion to log the deals in backdrop of festive tailwinds. Also, if regulators can enhance credit supply to the stalled projects via permitting more SWAMIH funds; will go long way in resurrecting the prolong sluggish real estate market and ensure customer delivery” said Niranjan Hiranandani, National President, NAREDCO.
More needs to be done
“The Consumer Price Index inflation rate of more than 6% for May-June was beyond the Reserve Bank of India’s tolerance mark. While the status quo maintained by the RBI is appreciated, the focus should be on boosting growth with the right fiscal measures and policy support. This is especially important at a time when the International Monetary Fund has cut India’s growth estimate from 12.5% in April to 9.5% in July,” concluded Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani.