Loan rate hike: RBI has revised the housing loan limits of Primary (Urban) Co-operative Banks (UCBs) and Rural Co-operative Banks (RCBs). State Co-operative Banks and District Central Co-operative Banks come under RCB.
RBI Monetary Policy Committee meeting: The Reserve Bank of India (RBI) on Wednesday announced an increase in the limit of personal housing loans given by cooperative banks to customers keeping in mind the needs of the customers.
Along with this, it was decided to increase the repo rate by 50 basis points in the meeting of the Monetary Policy Committee of RBI. The repo rate is now 4.9 percent. By increasing the repo rate, many banks increase their interest rates, which increases the loan installment amount for the customers.
Know what RBI has decided
RBI has revised the housing loan limits of Primary (Urban) Co-operative Banks (UCBs) and Rural Co-operative Banks (RCBs). State Co-operative Banks and District Central Co-operative Banks come under RCB. As per the revised limit, the individual housing loan limit of urban co-operative banks has been increased from Rs 30 lakh to Rs 60 lakh in Tier I cities and from Rs 70 lakh to Rs 1.40 crore in Tier II cities.
What will be the effect on the real estate sector
In addition, the individual housing loan limit has been increased from Rs 20 lakh to Rs 50 lakh for RCBs with net worth less than Rs 100 crore and from Rs 30 lakh to Rs 75 lakh for other RCBs. The Reserve Bank has also allowed state co-operative banks and district central co-operative banks to extend loans to commercial real estate-residential housing up to five per cent of their total assets. The decision of RBI to hike the repo rate is considered adverse to the real estate sector.
Decision to control inflation
Apart from this, the decision to increase the housing loan limit of co-operative banks is also welcome as it will benefit those customers who want to take housing loan from co-operative banks. Atul Goyal, MD, Goel Ganga Group, said that although the increase in the repo rate will make housing loans costlier, but this decision has been taken to control inflation. A volatile economy does not bode well for the real estate sector. For the real estate sector to grow, it is necessary for the economy to develop properly.
Raw material will be more expensive’
A similar opinion was also held by Suren Goyal, partner of RPS Group. He said that the prices of raw materials have remained high and in such a situation, if inflation is not controlled, then the raw material will become more expensive. This will have a bad effect on the real estate sector.
CREDAI Western Uttar Pradesh President Amit Modi said that the increase in the repo rate will weaken the sentiment of the buyers. Its impact will be more on first time home buyers. Sharad Mittal, Director and CEO, Motilal Oswal Real Estate Fund, said that by allowing cooperative banks to lend to residential housing projects, liquidity will increase in the real estate sector, which is much needed.
Demand will be affected in real estate
Manoj Gaur, chairman and managing director of the Gaur Group, said, “The RBI’s decision is a good one to strike a balance… A 0.50 per cent hike in the repo rate will make loans costlier.” He said, ‘This will make housing loans costlier at a time when the real estate sector was coming out of the outbreak of the pandemic.
However, curbing inflation will ultimately benefit the real estate sector, which is affected by higher raw material costs. Kushagra Ansal of Ansal Housing said that the decision to increase the repo rate is a step taken by the RBI to reduce inflation.
This will also bring down the cost of raw materials, which will benefit the sector. Uddhav Poddar, Managing Director of Bhumika Group, said, “The increase in the repo rate of RBI will definitely affect the demand in real estate,
Will affect buyer sentiments
Dharmesh Shah, CEO, Hero Homes said, “The RBI’s move will lead to an increase in home loan rates. This will affect home buyers. But it will affect residential sales only for a short period of time. Sanjay Sharma, Director, SKA Group, said, “Definitely this move by RBI will impact the sentiments of home buyers, but at the same time this move will also bring relief and benefit the sector which is battling high cost of raw materials. .’
