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RBI's 25 bps repo rate hike seen hitting housing demand harder than autos ahead of the festive season
RBI raised the repo rate by 25 basis points. FADA's Amar Seth expects only a marginal hit to auto demand, as around 70% of vehicle purchases are financed. Experts see housing as more exposed, and a two-wheeler expert says inflation and jobs are bigger festive risks.
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Demand data
Figures from Financial Express
| Average residential price rise, year-on-year: | 7% |
|---|
What it says about consumers
With housing prices up 7% year-on-year and the 25 bps repo hike raising financing costs, housing-linked assets look more vulnerable than auto retail, so weigh valuations and deal timing accordingly.
Next data points
- Festive-season vehicle registration data from FADA, especially two-wheelers versus passenger vehicles
- Home-loan and vehicle-loan rate revisions announced by major lenders
- Housing sales, enquiry and launch data from property consultants after the hike
- The next inflation print and any signs of job-market weakness
- RBI's tone at its next policy meeting on further tightening or a pause
Likely next moves
Our read of what comes next — analysis, not reported by the source.
- Banks and NBFCs are likely to pass the 25 bps hike on to floating-rate home and vehicle loans with a lag. They may soften the effect for festive buyers with fee waivers or promotional rates.
- Auto dealers and OEMs may lean on subsidised finance schemes and easy-EMI offers to protect the roughly 70% of buyers who finance their purchase.
- Housing developers are likely to hold back on further price increases after the 7% year-on-year rise. They may turn to payment plans and other incentives to keep buyers from deferring.
- FADA is likely to keep describing the rate impact on autos as marginal. Its focus is expected to shift to inflation and job sentiment if entry-level demand weakens.
- Two-wheeler makers may target price-sensitive and entry-level buyers with festive promotions, since the expert sees inflation and jobs as the larger risk.
The source
Filed
First seen