With the Reserve Bank of India (RBI) holding the interest rates stable, it will be business as usual for real estate, said Ramesh Nair, CEO and Country Head, JLL India.

He further said that RBI keeping the policy rates unchanged with repo rate at 6 per cent and reverse repo rate 5.75 per cent was expected given the unwavering market conditions in the last couple of months.

The inflation index has remained stable at 4.4 per cent and below RBI’s last outlook which is one of the key factors to keep the lending rates unchanged.

RBI is also taking time to evaluate the market impact of developments like increased global crude prices, hike in US Fed rates etc., that could have an impact on the Indian market in the coming months.

Also, government projects like healthcare insurance and a hike in MSP for agricultural produce will need higher government reserves. A critical decision factor would be the outlook for monsoon and the monsoon itself, which will bring out the true economic picture of India for this financial year in the next 3-4 months.

Real estate sector is looking for some encouragement that would move the needle towards accelerated growth. The apex bank could have directed the lenders to keep the MCLR below 10 per cent or put a cap on the same for home loans. Currently it is observed that MCLRs are higher by 10 per cent – 12 per cent in most leading retail lending banks.

This could have brought down the effective lending rate for home loans. Already by linking MCLR to lending rate, changing the earlier base rate, has made the cost of borrowing home loans higher in the short term.

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