Credai urges RBI not to hike repo rates

New Delhi: Realtors' apex body Credai on Thursday requested the RBI not to increase the repo rate in the upcoming monetary policy as this would raise the borrowing cost of builders and customers, impacting housing sales.

With retail inflation remaining above the comfort level of 6 per cent and most global peers, including the US Fed, continuing their hawkish stance, industry experts feel the Reserve Bank of India may go in for a 25 basis points hike in the bi-monthly monetary policy to be announced on April 6.

Confederation of Real Estate Developers' Association of India (Credai), having more than 13,000 developers as members, has “urged the RBI to not to increase the repo rate any further, citing the financial challenges faced by developers and the potential impact on housing sales due to the consequential rise in prices and home loan rates.”

In the last one year, the body said, the repo rate has increased from 4 to 6.5 per cent and another hike would lead to even higher borrowing costs for developers. Credai National President Harsh Vardhan Patodia said, “In the last 1 year, the cost of construction has risen rapidly due to the gradual increase in repo rates by the RBI, which has adversely impacted many developers as they struggle to cope financially. Another repo rate hike would not only make certain projects financially unfeasible, but it would also deter homebuyers as home loan rates will be at an all-time high.” The association said housing prices rose by 5-6 per cent in the last one year and any hike in the repo rate would lead to even higher project costs and housing prices. It argued that the profit margins of builders would reduce. Interest rates on home loans would touch almost double-digit home loan rates, deterring customers from purchasing properties, especially in tier 1 cities, Credai said.