The majority of retail banks have raised their lending rates in retaliation to the Reserve Bank of India’s decision to boost its benchmark lending rate by 50 basis points in an effort to control inflation. The cost of borrowing will go up as a result of the shift, but this won’t have a significant impact on the market for Residential Real Estate, especially as the industry enters the holiday season, which always results in a spike in demand for Luxury Real Estate.

The External Benchmark-based Lending Rate (EBLR), Repo-linked Lending Rate (RLLR), and Marginal Cost of Funds-based Lending Rate (MCLR) were raised by 50 basis points as of August 15, 2022. As a result, borrowers who have taken out Housing Loans with MCLR, EBLR, or RLLR would see a rise in their EMIs.

To promote economic growth in 2019, the government and RBI sought improved rate change transmission. The RBI issued instructions to banks requiring them to tie their floating rate loan products to important repo rates, Treasury bills, or other external benchmarks. The faster financial transmission was made possible by the switch to the new loan pricing technique since banks were now compelled to quickly inform their clients of rate changes.

Since rate increases were anticipated by all banks due to rising inflation, the Real Estate industry, which has been continuously expanding despite the pandemic, will not be impacted. Record-low loan rates and rising preference for larger homes have contributed to the robust demand over the past year. Market trends currently favor large homes with private outdoor areas, space for a home office, and an abundance of social infrastructure. Space, safety, and wellness are top priorities for homebuyers. A strong rise in the sales and launches of Luxury Residential Real Estate properties is encouraged by accessible financing.

To understand further how the dynamics of Housing Loan limits can affect the overall pace at which the Indian Real Estate market will grow, check out the complete article by our Director Mr. Rakesh Reddy by clicking on the link below:

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Real Estate Sector Expected to Rise Exponentially With the Increase in Housing Loan Limits!