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RBI’s decision signals the beginning of the end for low-interest home loans: ANAROCK Group

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With inflation slightly higher in the aftermath of the Russian-Ukrainian war and soaring oil prices, the RBI took an unforeseen and difficult decision: to raise repo rates by 40 basis points, bringing them to 4.40% . This was expected, as inflation has definitely moved into the threatening zone.

Unfortunately, for home buyers, this rise signals the imminent end of the all-time low interest rate regime, which has been a key driver of home sales across the country since the start of the pandemic. .

Additionally, rising interest rates and inflationary trends in basic raw materials in construction, including cement, steel, labor cost, etc. will increase the burden on the residential sector, which performed considerably well in the previous quarter – Q1 2022.

This rise in interest rates will ultimately impact the overall cost of acquisition for homebuyers – and could dampen residential sales to some degree. The possibility of an overall price increase was also highlighted in ANAROCK’s recent consumer survey, in which at least 56% of respondents believed that house prices would rise in 2022.

In-depth analysis has revealed that a price increase of more than 10% will have a “high impact” on residential sales and 10% on overall acquisition costs.

These are the views of Mr. Anuj Puri, President – ANAROCK Group