Realty sector to take hit as repo rate remains unchanged

The repo rate is interest that banks pay when they borrow money from RBI to meet their short-term fund requirements. RBI has kept it constant at 6%.

After the lackluster budget, real estate sector has faced another setback as the Reserve Bank of India (RBI) kept repo rate (RR) unchanged on Wednesday.

RBI has kept the repo rate constant at 6%. (HT File)

The real estate sector is facing a slowdown with hardly any sales. Any reduction would have directly impacted interest rates on home loans, banks, as well as lower EMIs for those who have already availed home loans.

“On one hand, the government had been pushing the RBI to reduce lending rates. On the other hand, RBI decided to maintain the current level, indicating cautiousness due to the rising rate of inflation. A rate cut would have had a positive impact on real estate since home loans would have become cheaper,” said Samir Jasuja, managing director, founder of PropEquity.

The repo rate is interest that banks pay when they borrow money from RBI to meet their short-term fund requirements. RBI has kept it constant at 6%.

“The market is not in good shape. Any reduction would have provided the much needed push to the market,” said Shadaab Patel, managing director, Platinum Constructions.

In the last few years, the builders priced apartments at exorbitant prices. In addition, the RBI imposed stringent conditions for availing loans. The high interest rates on home loans aggravated the situation further. However, the interest rates have started coming down in recent times.