Homebuyers need to hurry; historic low interest rates won't last long: Experts

Amid cheers over the central bank’s decision to keep repo rate unchanged, the real estate industry experts are urging potential homebuyers to book their desired properties soon. According to them, the prevailing “historic low home loan interest regime may not last long” as the Reserve Bank of India (RBI) may increase the rates in the coming quarters.

After the three day meeting, today the Monetary Policy Committee (MPC) of the RBI decided to keep the repo and reverse repo rates unchanged at 4 per cent and 3.35 per cent, respectively. This is likely to keep the commercial banks and other retail lenders like the NBFCs from tinkering with the home loan interest rates, which incidentally is now at a ‘historic low’. Currently, most of the leading lenders are offering home loans at 6.4 to 6.9 per cent annual interest rates to retail consumers.

Industry experts are, however, cautioning interested homebuyers that this record low home loan rates may not last long.

According to Niranjan Hiranandani, Vice-Chairman of industry body NAREDCO and MD, Hiranandani Group, as retail inflation is higher than the repo rate, the interest rates may go up in coming quarters. “For the home buyer, favourable market dynamics in terms of home loan interest rates continues. However, trends indicate that this ‘historic low’ may not continue for long, and home seekers would be advised to pick up the home loan while still at such low rates,” he said.

Hiranandani said, RBI has retained its growth projection for the GDP at 9.2 per cent and inflation at 5.3 per cent for the current financial year, implying that the higher growth projections for the GDP and inflation is an indication of the upcoming rate hikes.

Anuj Puri, Chairman, ANAROCK Group, is of similar view and cautioned that the lower rates may not continue for long, implying that people willing to purchase a home should not wait.

“While the window of opportunity for homebuyers to avail low interest rates has been extended for some more time, it is unlikely to prevail for much longer - sooner or later, repo rates will rise”, he said.