Bank’s Lending Rates Hike Impact on Real Estate
Lending rates went up immediately following Reserve Bank of India’s 40 basis points repo rate increase. According to the real estate consultants, the hike signals an end to the all-time low interest regime, which has been one of the major drivers behind home sales across the country. It will also raise the borrowing costs of companies, which have already begun passing these on to consumers. As per Vivek Rathi, “A 1% increase in home loan interest rate reduces house purchase affordability by 7.4%. We are on a landscape of rising interest rate and increasing property price, which will put pressure on affordability if they move beyond income growth. At the current juncture, strong income growth is supportive of homebuyer affordability. Hence, comfortable affordability level coupled with the renewed enthusiasm for home ownership shall help maintain the strong housing sales momentum in the near term.”
Tags : Bank’s Lending Rates Hike Impact Real Estate Vivek Rathi Director - Research Knight Frank Reserve Bank of India