Big blow to the realty sector! Expensive home loan can reduce the sale of houses
Realty sector
Highlights
- Banks will soon increase interest rates on home loans
- Due to the cost of home loans, the burden of EMI will increase on people.
- People can postpone the decision to buy a house if EMI increases
Realty Sector may get a shock. Actually, after two years to control the rising inflation, the Reserve Bank of India has increased the interest rates. This will certainly help in bringing down inflation but at the same time, home loans will become costlier. Banks will soon increase the interest rates on home loans. This will increase the home loan EMI. This will affect the sale of houses. Home sales may drop in the coming days. Industry people expressed this apprehension. This will affect the growth of the sector.
Affordable home loans boosted sales of homes
Rakesh Yadav, CMD, Antriksh India Said that after Corona, the cheap home loan rate has worked to increase the sale of houses. Home sales had increased as the EMI burden on the common people was reduced, which was helping the sector to get back on track. However, the decision of the Reserve Bank of India to increase the repo rate all of a sudden is surprising. This increase will affect home buyers, he said. This may give a blow to this sector. Developers are already troubled by the Corona pandemic and the uneven touching prices of construction giants. This decision will serve to have an even worse effect.
Sudden growth will affect the growth of the industry
Boman Irani, President, CREDAI-MCHI said that sudden increase in repo rate along with inflation will affect the growth of the industry. He added that rising raw material prices and rising interest rates can put people off their intention of buying a house. Anuj Puri, chairman of Enrock, said that this hike indicates the end of the era of low interest rates. Apart from this, due to increase in cost of cement, steel, labor etc., the burden of housing sector will increase, he added.
The burden on banks will increase
RBI has increased the policy rate (repo) by 0.40 per cent to 4.40 per cent to control inflation. Along with this, it has also been decided to increase the cash reserve ratio (CRR) by 0.50 percent to 4.5 percent. This will reduce the cash with banks by Rs 87,000 crore. This will increase the burden on the banks.
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