Real Estate

Unchanged Repo Rate Positive for Home Loan Borrowers

unchanged repo rates RBI

With Omicron throwing a shadow of doubt across the world and in India, the RBI has decided to keep the repo rates unchanged at 4% and reverse repo rate at 3.35%. This was expected, and is the ninth consecutive time that the RBI maintained status quo amid current uncertainties.

The unchanged repo rates will help maintain status quo on the prevailing low interest rate regime for some more time. This works well for all home loan borrowers as the environment of affordability will continue.

Let me be very clear – it is within the government’s ability to do so. First and foremost, it must reduce the GST levied on raw materials used for construction. Considering that housing is a basic need and developers are catering to this need, there is no reason why the taxation on these raw materials should be so high.

Secondly, we have repeatedly highlighted that the constant rise in the basic cost of cement and steel is because manufacturers of these raw materials have created a cartel that unjustly inflates the prices. Let me explain how this works.

This is no longer sustainable. There are now only two possibilities:

1. If the government is serious about delivering Housing for All, it must reduce GST on construction raw materials and enforce their fair and equitable pricing. This will help developers to keep prices attractive for homebuyers for a while longer.
2. If these measures are not taken, homebuyers will have to bear the inflated costs of construction materials via higher property prices.

Related: Indian Real Estate industry on course for sustained high growth at over 75% YoY…

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