A rate hike by the Reserve Bank of India (RBI) was expected, but the expectation was for a maximum of 35 bps. The hike by 50 bps is definitely on the higher side. This means that the home loan lending rates will now edge further into the red zone, Anuj Puri, Chairman of the ANAROCK group said.
This is the third consecutive rate hike in the last two months. It also finally marked the end of the all-time best low-interest rates regime: one of the major factors that drove housing sales across the country since the Covid-19 pandemic.
This rate hike came along with the inflationary trends of primary raw materials, including cement, steel, labour, etc., that have recently led to a rise in property prices. “Together, these factors – rising home loan rates and construction costs – will impact residential sales that did reasonably well in the first half of 2022,” Mr Puri said.
As per ANAROCK Research, approx. 1.85 lakh units were sold in H1 2022 across the top 7 cities. The repo rate now stands at 5.4 per cent, thus reaching the pre-pandemic levels. While inflation has partially eased as compared to the surge in April, it continues to be above the RBI’s target.
