Revised Repo rates: The tool to combat inflation
The real estate sector of the nation is in a flux as high interest rates shake fist at to pause the off-shots of the economic revival. The demand in the sector has already taken a dip amid a sudden increase in home loan rates. This has led the key developers across the nation to worry about a large bulk unsold inventory.
Upward revision of the policy rate by the central bank has compelled other banks to increase their lending rates. This has led to a dubious effect-increase in the funding cost of the developers and hike in home loan rates knocking out the demand.
According to industry experts, developers will have a tough time to work in this high interest regime. This can eventually call for bad debts. Rise in interest rates and increase in cost of capital will slow down the number of realty projects in the country significantly.
Revised Repo rates
With the RBI making the big move and increasing the repo rates, private banks have raised their base rate also. ICICI, Yes Bank and Axis Bank raised their base rate by 25 basis points to 10, 10.75 and 10.25 percent respectively.
Furthermore, HDFC has also taken the decision to hike its retail prime lending rate by 25 basis points to 16.65%. On account of the revision, HDFC would offer home loans upto Rs 30 lakh at 10.40%. For loans above Rs 30 lakh, the interest charged will be 10.65% by HDFC.
Lending Rates
|
Banks |
Lending Rates for loans up to Rs 30 lakh (%) |
|
SBI |
9.95 |
|
HDFC Bank |
10.4 |
|
ICICI Bank |
10.4 |
|
Canara Bank |
9.95 |
|
Axis Bank |
10.25 (up to Rs 25 lakh)
|
Though the real estate sector has a valid reason to feel disappointed with the hike in borrowing cost, the Reserve Bank of India has included provisions to increase liquidity in the system. However, few developers have a notion that in regard to the present economic condition, RBI has taken the right move with the monetary policy.
