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RBI MPC: Home Loan Rates To Remain Affordable As RBI Pauses Repo Rate Hike – News18

RBI Governor Shaktikanta Das

RBI Monetary Policy February 2024: RBI has decided to maintain the status quo on the key lending rate or repo rate and keeping it unchanged at 6.5 per cent.

RBI Monetary Policy 2024: Reserve Bank of India Governor Shaktikanta Das on Thursday announced the bi-monthly MPC decisions amid expectations of continued pause on the key interest rate as inflation remains near the upper tolerance level of 6 per cent.

While announcing the decisions, Governor Das said that the RBI has decided to maintain the status quo on the key lending rate or repo rate and keeping it unchanged at 6.5 per cent.

Impact On Housing Sector

Anuj Puri, Chairman – Anarock Group, said, “With the fundamentals of the Indian economy remaining strong despite all global headwinds and inflation well under control, the RBI once again decided to keep the repo rates unchanged at 6.5%, thus extending the festive bonanza that it gave to the homebuyers in its last two policy announcements. Thus, homebuyers retain their advantage of relatively affordable home loan interest rates.”

Housing Market Trends & Home Loan

Puri added that if current trends are considered, the housing market has been unstoppable, and unchanged home loan rates will help maintain the overall positive consumer sentiments.

“Given that housing prices have risen across the top 7 cities in the last one year, this breather by the RBI is a distinct advantage to homebuyers.”

As per Anarock Research, 2023 saw average housing prices rise by anywhere between 10-24% in the top 7 cities, with Hyderabad recording the highest 24% jump. The average prices in these markets stood at approx. Rs7,080 per sq. ft., while in 2022 it was approx. Rs 6,150 per sq. ft. – a collective increase of 15%.

“Going forward, we can expect the momentum in housing sales to continue, significantly aided by the unchanged repo rates which will keep home loan interest rates attractive and also signal ongoing robustness of India’s positive economic outlook,” Puri added.

Repo Rate Trend

For a year, the Reserve Bank has kept the short-term lending rate or repo rate stable at 6.5 per cent.

The benchmark interest rate was last raised in February 2023 to 6.5 per cent from 6.25 per cent to contain inflation driven mainly by global developments.

The MPC is entrusted with the responsibility of deciding the policy repo rate to achieve the inflation target, keeping in mind the objective of growth.

In an off-cycle meeting in May 2022, the MPC raised the policy rate by 40 basis points and it was followed by rate hikes of varying sizes, in each of the five subsequent meetings till February 2023. The repo rate was raised by 250 basis points cumulatively between May 2022 and February 2023.

The MPC consists of three external members and three officials of the RBI.

The external members of the panel are Shashanka Bhide, Ashima Goyal, and Jayanth R Varma. Besides Governor Das, the other RBI officials in MPC are Rajiv Ranjan (Executive Director) and Michael Debabrata Patra (Deputy Governor).

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