New Delhi, Oct. 7 -- Costlier home loans could be a dampener for housing sales during the upcoming festive season, according to realtors' industry bodies CREDAI and NAREDCO.

On Wednesday, the Reserve Bank of India raised its benchmark repo rate by 25 basis points to 5.50 per cent, its first hike in nearly four years, while signalling that rate cuts are off the table in the near term and that further hikes could follow amid rising inflation, a weak rupee and higher crude oil prices.

Commenting on the RBI's monetary policy, CREDAI National President Shekhar Patel and NAREDCO President Parveen Jain said the increase in the repo rate would lead to a rise in interest rates on home loans, which in turn could have some impact on housing sales.

Both Patel and Jain said that the hike in the repo rate should be seen in the context of global uncertainties and inflationary concerns.

The CREDAI President stated that the RBI monetary policy would have a bearing on the cost and availability of funds.

"We are also entering the festive season, which is an important period for the housing market, and the increase in borrowing costs could have some impact on sales during this period, although the underlying demand for housing remains strong," Patel said.

Jain noted that the housing demand remains strong at present.

"We expect the impact of this increase on the residential market to remain limited, supported by strong buyer sentiment, festive demand and the long-term need for homeownership," the NAREDCO President said.

The real estate sector will continue to demonstrate strength and resilience in maintaining its current momentum, Jain observed.

Patel further said, "We should understand that for a homebuyer, the interest rate at any particular point is only one part of a much longer decision."

"A home loan is generally a commitment of at least 15 years. During that period, there will be times when rates go up and times when they come down. We should not look at repo rate changes in isolation. What matters is the long-term outlook for the economy and overall growth," he added.

Published by HT Digital Content Services with permission from Millennium Post.