1st August 2018: And once again we witnessed a hike in the repo rate on the 1st of August 2018. Repo Rate in a dabblers language is the rate at which The Reserve Bank of India (RBI) lends short term loan/ financial assistance to the bank who then navigates the interest to the ultimate borrower. This chain of fluctuations in the rates are eventually borne by the end consumer, for some positively and for some otherwise. In this volatile market it is the first time since October 2013 that the rate has been increased at consecutive policy meetings.
The RBI raised key policy rates after 4 years in June 2018 and now this is the second increase of 25 basis points taking the repo rate to 6.5 %. This would in-turn increase the interest cost of housing finance for existing home loan borrowers as well as the new home loan borrowers. We feel the RBI is walking on a very tight rope and needs to strike a balance between growth and containing inflation. As far as its impact on the residential market is concerned we feel that the investors are anyways out of the market for quite some time and the genuine end user may not defer his/her purchase decision keeping in mind the offers which are currently being doled out to residential real estate buyers. So we don’t see much impact on the residential real estate market due to hike in repo rate.
As a consumer post this hike, if you have plans to borrow a loan, do not hesitate on the fluctuations as the home loan rates could vary depending on the lender, loan amount and your profile. One needs to just ensure that you thoroughly do your research and compare different home loan rates offered by multiple lenders before binding on a decision.
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