RBI Rate Hikes To Have Adverse Impact On Home Sales As Loan Interest Rates To Rise

The hike in interest rates by the RBI by 35 basis points is likely to have some impact on home sales and interest rates on home loans are likely to rise.

Amarendra Sahu Founder & CEO, at NestAway Technologies says that the RBI hiking rates will make home loans dearer, thereby push prospective homebuyers to opt for rental.

"The repo rate now is near 4.5 year high and likely to stay higher for an extended period of time. Mortgage rates are now again at or even higher than they were prior to COVID. This will probably give the rental market more traction. Renting will become significantly more affordable due to increasing home-buying costs and interest rates. Home rentals have little correlation to home loan rates. We expect the Central Bank to stay on a long pause before they start cutting rates likely in the later part of CY23," he states.

According to Cyrus Mody, Managing Partner, Viceroy Properties, this rate hike can have an adverse impact on home sales. "However, it seems unlikely considering how we are witnessing strong traction, as most buyers are looking for self-use and not investment. Going forward, we expect the demand for projects developed by branded developers to continue witnessing strong demand with pricing power," adds Mody.