RBI retains repo rate at 6.5% for tenth consecutive time

October 9, 2024: In the first Reserve Bank of India’s (RBI) 51st Monetary Policy Meeting (MPC) held from October 7 to 9, 2024, it was decided to maintain the repo rate at 6.5%. This is the 10th consecutive time when it remains unchanged. Of the six members in the Monetary Policy Committee (MPC), five members voted in favour of maintaining the repo rate.

The RBI also maintained status quo in the Bank Rate and the Marginal Standing Facility (MSF) at 6.75%. The Standing Deposit Facility (SDF) rate is maintained at 6.25%. The fixed reverse repo rate stands at 3.35%.

Repo rate is the interest that the RBI charges from banks and financial securities for the short-term loans in India. Lower repo rate fosters economic growth and a higher repo rate can slow economic growth.

Led by RBI Governor Shaktikanta Das, the RBI’s MPC meeting was held from October 7-9, 2024.

What is the impact of unchanged repo rate on the real estate market?

Dhruv Agarwala, group CEO, Housing.com & Proptiger.com

The RBI’s decision to hold the repo rate unchanged at 6.5% for the 10th time in a row is on expected lines as the apex bank tries to maintain a balance between inflation and growth. However, the banking regulator’s changing of policy stance from ‘withdrawal of accommodation’ to ‘neutral’ signals the RBI could initiate rate cuts in the upcoming policy meets. This comes as good news for prospective buyers, planning to invest in property in the near term.We believe this approach will not only sustain momentum in the housing sector but also contribute significantly to broader economic growth in the long term.

Pradeep Aggarwal, founder & chairman, Signature Global (India)

The RBI’s decision to hold rates steady aligns with expectations, to keep inflation under check. While the recent rate cut by the US Federal Reserve has sparked similar hopes in India, the domestic situation remains distinct, with the central bank prioritising inflation management within its target range.  Yet policy stability bodes well in the ongoing festive season which promises to be a significant phase in terms of real estate demand as the industry is hopeful of the continued rise in residential sales. As and when a rate cut is anticipated soon, which, when implemented, will benefit both homebuyers and real estate developers to capitalise on the market and strengthen overall economic growth.

Mohit Jain, managing director, Krisumi Corporation

The apex bank’s stance to keep the rates unchanged for the tenth consecutive time is on the expected lines. While the real estate industry was hoping for an interest rate reduction, a status quo is the next best outcome for the industry. Stable rates ensure consistent EMIs, giving homebuyers the confidence to plan their purchases. Furthermore, the expectation of potential rate cuts in the coming months is also boosting optimism in the real estate market and we expect the robustness in demand to continue over the next few years.

Ashwin Chadha, CEO, India Sotheby’s International Realty

We were more hopeful of a rate cut this time around,  after moves by the U.S. Federal Reserve and other central banks. But the RBI’s decision to hold the repo rate steady for the 10th time in a row shows that India is laser-focused on its own economic landscape, rather than following global cues.

One standout from the Monetary Policy Committee’s (MPC) meeting is the shift to a neutral stance, which suggests they’re open to more flexibility. While inflation is on a downward trend, it’s still not entirely stable, and the MPC is aiming for that 4% sweet spot. A rate cut is certainly on the cards if inflation keeps cooling off, which looks promising in the near term.

For real estate, this steady approach is a win. With stable interest rates, homebuyers, especially during the festive season, will feel more confident in making their purchase decisions.

Vimal Nadar, head of Research, Colliers India

While RBI has kept the benchmark lending rates unchanged at 6.5%, a change in stance from “withdrawal of accommodation” to “neutral” indicates its clear direction for a possible reduction in interest rates in the foreseeable future. This ongoing stability in repo rate should provide a significant thrust to residential real estate during these festive months as home loan interest rates are likely to remain steady.

Typically, Q4, marked by higher inclination of homebuyers to wrap-up property purchases during the auspicious period combined with instantaneous liquidity benefit aided by developers offering attractive discounts, has historically provided the final push to housing sales across the major markets in the country.  Additionally, steady borrowing costs and recent extension of Input Tax Credit (ITC) by the Supreme Court can potentially benefit property developers engaged in construction of commercial office buildings.