TIL Desk/Business/New Delhi/ Housing and auto loans are set to become costlier with India’s central bank raising its key interest rate for the first time since January 2015, though industry stakeholders feel it will have limited impact on housing loans but in the automobile industry the cost of funds for manufacturers would go up along with loans for buyers. The RBI on Wednesday raised its key interest rate for the first time by 25 basis points (bps) to 6.25 per cent.
“As buying decisions are generally not taken based on fluctuations in home loan rates, there will be very little effect on the real estate market. However, for some home buyers looking for making a very low-ticket size purchase decision, there may be some tentativeness in the decision making…,” said Ramesh Nair, CEO & Country Head, JLL India. Overall, there would be minimal impact on the end-user in the housing sector, Nair added.
“The hike may seem to dampen sentiments in the market, but in terms of real estate, it may have little or no impact. As almost all home loans these days are on floating rates, the rise and fall in home loan rates does not impact the performance of residential real estate sector much and tends to balance each other in long term,” he said. But Joe Verghese, Managing Director, Colliers International India, feels the potential increase in interest rates would impact the developers more than the home buyers.
