In its latest meeting, the Reserve Bank of India’s Monetary Policy Committee (MPC) opted to maintain the status quo on key policy rates. The repo rate, at which the RBI lends to commercial banks, remains unchanged, as does the reverse repo rate, which stands as the rate at which banks park excess funds with the central bank. This decision comes amid a backdrop of carefully balanced considerations around inflationary pressures, global economic conditions, and domestic growth dynamics. The MPC acknowledged the complex interplay of factors affecting inflation, including elevated global commodity prices and domestic supply-side constraints.

 Looking forward, the MPC reaffirmed its commitment to supporting economic recovery while ensuring price stability. The monetary policy stance remains accommodative, signaling a willingness to sustain adequate liquidity and conducive financial conditions. The committee’s assessment underscored the importance of maintaining financial stability amidst ongoing uncertainties, emphasizing vigilance and proactive measures to mitigate risks. As India navigates through evolving economic challenges, the decisions taken by the MPC aim to foster resilience and facilitate a sustainable path to recovery.

 Comments By Industry Experts:

 Mr. Samir Jasuja, Founder & CEO of data analytics firm PropEquity

 “The Reserve Bank’s decision should be seen in the context of inflation-growth dynamics and the ongoing geopolitical crisis.
Any rate hike would have halted the real estate sales momentum which in the past few years have been on an upwards trajectory.
Going forward, a reduction in the benchmark interest rate will go a long way in providing a further boost to the real estate sector, a major segment of the economy“.

 Mr. Aman Sarin, Director & Chief Executive Officer, Anant Raj Limited

We welcome the Reserve Bank of India’s (RBI) decision to keep the policy rate unchanged to maintain economic growth and keep inflation under control. This decision fosters a stable economic environment, which is crucial for sustained development.

 We believe that stable interest rates are particularly beneficial for the real estate sector. When interest rates remain steady, home buyers can plan their purchases without the uncertainty of potential rate hikes. The cost of borrowings too remains stable, thus, the cost of construction.

 In the forthcoming RBI Monetary Policy, we hope the positive trend continues and expect favorable news for homebuyers specially in the Affordable and middle class housing.

 Mr. Mohit Jain, Managing Director, Krisumi Corporation

 “While a rate cut would have been an ideal scenario to propel economic growth across industries including real estate, maintaining the status quo will help prevent borrowing cost from rising, enable affordability, propel the residential demand and boost the overall economy. The RBI’s endeavour to maintain a stable policy environment will benefit not just homebuyers but also real estate developers who have the opportunity to innovate and cash in on the buoyancy.”

 Siddharth Karnawat, Co-Founder, Blue Sky Capital

 RBI keeps rate unchanged at 6.5% for 9 consecutive policies and that was expected on the sidelines of global uncertainty we are into. With FY25 GDP growth rate estimated at 7.2% and CPI inflation estimate at 4.5% maintained for FY25 but to be noted that concern over stubborn food inflation still exists which seems clearly the focus of RBI. Already big banks results showing deposits side pressure and concern over retail loans and RBI was yet again upfront on clearly highlighting that. RBI too indicated money going into markets due to attractive returns and hence banks are facing funding issues.It would be needless to say that currently RBI feels financial market is robust but is proactive to call out as these issues should not become a concern in future. As the focus of RBI always Digital lending RBI proposes to create a public depository of digital lending apps. What is also a good move on ease of doing business is Cheque clearance now will be in hours rather than a couple of days.

 To sum up broadly in line with the street’s expectations but with a clear focus on food inflation and not in hurry to change rates.

 Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara private limited

The retention of the status quo in the repo rate at 6.5% by the RBI for the ninth consecutive time sends an unequivocal signal about India’s resilient economy and a central bank committed to sustainable growth. That continuity automatically impacts personal financial planning. If one has variable rate loans, this stable interest rate environment provides the opportunity for accelerated repayment strategies. Consider this—an additional payment of even 5% of the EMI towards the principal of a ₹50 lakh home loan at 8.5% interest can cut the tenure by almost 2 years, saving more than ₹5 lakhs in interest.

On the investment front, even though interest rates for FDs might remain flat, this is the time to consider a systematic investment plan in equity mutual funds. With Sensex and Nifty touching all-time highs and the RBI forecasting robust GDP growth, disciplined investments in equities may deliver significant returns in the long run.

So, as depicted in the past records data of SIPs, the return on diversified equity funds on average resulting from SIP investments is approximately ranging within 12-15 % in a 10-year period. Another positive aspect realized by a stable interest rate is that this is a good time to seek an insurance review especially on term life insurance where rates are expected to remain fairly priced for the future.

 Manoj Goyal, Director, Forteasia realty pvt ltd.

 The move by the RBI to retain the repo rate at 6.5% for the ninth time in a row brings stability to the milieu of real estate financing, helping homebuyers in a manner that keeps interest rates on home loans steady at an average of 8.5%-9.5% for most banks at the moment. For a regular house loan of ₹50 lakhs for 20 years, this will come to an EMI of about ₹44,000 to ₹47,000, depending on the precise interest rate. With the unchanged repo rate and a GDP growth estimate at 7.2%, things have augured well for FY25 in terms of real estate investment, according to the RBI. History suggests that any period where interest rates are stable would normally comprise constant growth in property values. For instance, during the last protracted period of rate stability from 2015 to 2018, the House Price Index showed an average annual growth of 5.8%. This opens up prospects for prospective homebuyers to take balanced decisions without worrying about fluctuating EMIs.

 LC Mittal, Director, Motia Group

 The hold of the repo rate at 6.5% for the ninth time in a row bodes well with huge implications for the affordable housing sector. With home loan rates steady, the affordability index remains positive for first-time homebuyers. The share of the average home loan payment to income has improved from a high of 61% in FY14 to 43% in FY23, largely due to interest rate stability and rising incomes. This obviously would continue with the present rate stability. While the government’s affordable housing push and a supportive stance by the RBI would have given a fillip surely to this segment, it is quite probably because of price hikes that volumes have not grown so much. Affordable housing—units priced below ₹40 lakhs—accounted for 30% of new launches in the top seven cities in 2023. A status-quo repo rate, along with various government incentives like PMAY, will infuse continuous growth into the affordable housing sector and drive expansion in the overall real estate sector in step with the RBI’s projected 7.2% GDP growth for FY25.

 Anurag Goel, Director at Goel Ganga Developments

 The nuanced impact of the decision by the Reserve Bank of India to retain the repo rate at 6.5% for the ninth consecutive time is this: while residential real estate benefits directly from stable home loan rates, commercial real estate benefits on account of the overall economic stability that this decision signals. With the RBI retaining its GDP growth estimate at 7.2% for FY25, we can look forward to sustained demand for office spaces, especially in IT hubs and emerging business districts. Office space leasing in the top 8 cities increased by 15% YoY in 2023 to 38.2 mn sq ft. A stable rate environment is likely to trigger more long-term leases and property acquisitions by businesses. What is more, catalysed by the pandemic, for e-commerce the boom goes uninterrupted; hence, demand continues to surge for warehousing and logistics spaces, having grown by 47 percent YoY in 2023 to 51.1 mn sq ft. This trend will be accelerated further as both financing costs and attitude of optimism toward the economy continue unabated.

 Aman Gupta, Director of RPS Group

 The RBI has retained the repo rate at 6.5 percent for the ninth consecutive time, which impinges in a huge way on real estate developers and investors. On the upside, stability in interest rates, along with the RBI’s now forecasted 4.5 percent inflation, gives an ideal platform for the planning and execution of long-term projects. It now enables developers to plan new projects confidently as financing costs are more predictable. Supply of new housing in Top 7 cities surged by 23 percent year-on-year in 2023, touching 3.65 lakh units. Subsequent supply would maintain this upward trajectory with stable interest rates and positive economic projections. In times of continuity concerning repo rates revised and sustained at the level taken, an unchanged status of interest rate will retain the lucrativeness of rental yield, already averaging 3-4 percent in major Indian cities on residential properties, and 7-9 percent with regard to commercial properties. With an RBI GDP growth projection of 7.2 percent for FY25, we may further witness sustained appreciation in property values—especially in fast-growth urban centers and their emerging satellite towns.

 Gurmit Singh Arora, National President, Indian Plumbing Association

 The RBI’s decision has a cascading effect on the whole realty ecosystem and allied industries, as it/storage kept the repo rate unchanged at 6.5% for the ninth time in a row. Construction contributes to about 6-8% of India’s GDP, he said; this stability gives predictability to funding costs for projects. On track to reach $1.4 trillion by 2025 in India, stable interest rates take an important seat in this race to growth for the construction sector. Also, the home improvement and interior design sectors get positively impacted with an unchanged repo rate. Stable EMIs will prompt more people to invest in renovations and upgrades. Furniture and Home decor market in India was valued at $32 billion in 2023 and is further likely to bloom under such stable economic conditions. In all, the proptech sector saw over $3.4 billion investments from 2009 through 2022 alone. More innovation in property technology and digital real estate services shall follow under the proptech umbrella due to predictable real estate market conditions.

 Mr. Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd.

 “The RBI’s decision to keep rates unchanged is on expected lines with an intention to keep inflation under check. While the RBI is focused on reining in inflation within its target limit, the expectation of good monsoon may prompt the apex bank to lower interest rates in the subsequent months thereby further propelling real estate sales momentum and also providing an opportunity to perspective homebuyers to enter in the market. While portraying a robust forecast for economic growth, the RBI’s all-round efforts will positively impact homebuyers sentiments and industry as well”