The Reserve Bank of India has very little room to cut benchmark interest rates, according to the chief of country’s largest mortgage lender, with attractive offers from lenders and developers making it an ideal time for consumers to buy a house.
“In my view, the ability of RBI to cut rates is going to be very limited going forward," Keki Mistry, chief executive officer of India’s largest mortgage lender Housing Development Finance Corp. (HDFC) said in an interview to Bloomberg TV. “This is the lowest to my mind that interest rates can go."
Low interest rates, discounts offered by cash-stretched builders and reduction in taxes for purchasing real estate makes it an opportune time for consumers, he added.
The South Asian nation’s retail price gauge has been rising for the past few months and hit a six-year high in October, partly fueled by a recovery in economic activity after a pandemic-induced slump. Recent data -- from tax receipts and digital payments to fuel sales and factory output -- showed an uptick in October.
“Growth has come back in a big way. Things are more than normalized," Mistry said, citing HDFC which saw a 35% increase in individual loan disbursements in October compared to last year. “By the time we come to March 2021 all industries would be back to 100% capacity."
The RBI, which has cut rates by 115 basis points this year, has retained its accommodative stance and is forecasting consumer price-growth to ease to 4.5% in the first three months of next year. A report by the central bank separately showed the economy slipped into a technical recession.
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