LIC Housing Finance and Bajaj Housing Finance on Monday announced a hike in lending rates for home loans by 0.5 percentage points. With this increase, Bajaj Housing Finance’s cheapest product, for salaried and professional applicants, will now be 7.70%. Despite the latest hike, the company claimed to offer loans at competitive rates.
For LIC Housing Finance, the new interest rates on home loans will start at 8% from 7.5% before the hike. The company’s CEO and Managing Director, Y Viswanatha Gowd, argued that the RBI’s repo rate hike of 0.5 percentage points had caused “minimal fluctuations” in the monthly installments or tenor of home loans. He also said housing demand will remain robust.
The RBI raised the repo rate – the key monetary policy rate – by 50 basis points to 5.4% earlier this month to counter inflationary pressure. The latest hike led the repo rate to break through the pre-pandemic level of 5.15%. The RBI rate hike is the third in a row after rising 40 basis points in May and 50 basis points in June. RBI Governor Shaktikanta Das signaled that the latest hike was not the end of the rate-tightening regime and indicated that there may be further hikes to bring inflation under control.
Anuj Puri, Chairman of ANAROCK Group, had said after the RBI’s monetary policy review meeting that the hike would push mortgage rates further into the red zone. “This is the third consecutive rate hike in the past two months and finally marks the end of the best low interest rate regime ever – one of the main factors that have boosted home sales. across the country since the pandemic. This blow is accompanied by inflationary trends in primary commodities, including cement, steel, labor, etc., which have recently driven up property prices.
Ramani Sastri, Chairman and Managing Director of Sterling Developers Pvt Ltd, said: “RBI’s decision could have an immediate impact on buying a home in the short term, as the recent back-to-back hikes in repo rates have already increased the overall cost of acquisition for buyers. Rising interest rates along with high construction costs and commodity price pressures could negatively impact real estate sentiment as buyers are likely to invest in their dream homes ahead of the season. festivals. However, despite the odds, we remain hopeful as there is significant pent up demand from a very large population and first time home buyers. »