The realty sector is unlikely to be impacted adversely following the measures announced by the Reserve Bank of India on Tuesday aimed at tightening home loan regulations.
However, rising capital values can play a spoilsport hereafter as the RBI, through these measures, has alerted home buyers, developers and banks, industry experts said.
The RBI on Tuesday, as part of its monetary policy review, raised repo and reverse repo rates by 25 basis points each while keeping the cash reserve ratio and bank rates unchanged. It also announced reduction in loan-to-value ratio to 80%, which most commercial banks were keeping at around 85%.
RBI also increased the risk weights for loan of more than Rs 75 lakh to 125% from 100%, and raised provisioning requirement for teaser rates to 2% from 0.4%. According to Ajay D’souza, head of research at Crisil, increasing risk weights for loan of more than Rs 75 lakh may not impact the demand, as a large part of demand is for loans less than that.
However, borrowers with a loan above Rs 75 lakh may have to face a 150-basis point higher cost as a result of all the measures announced on Tuesday, said an analyst with a foreign brokerage.
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