Home Loans to Get Cheaper: FM Assures
Sep 10, 2019 Real Estate News
On 23rd August, the Finance Minister Nirmala Sitharaman announced that the banks have agreed to launch loan products linked to the RBI’s repo rate and they will also pass the rate cut benefits to the loan borrowers. In the statement made, she said that the banks have decided to launch repo rate-linked loan products. This will result in reduced EMI for housing loans - this means the moment the reduction happens; it will directly benefit end customers.
Linking the repo rates to the home loan will directly benefit the loan borrowers. The move made by the government shows that they are making a constant effort to revive the real estate sector of the country and want people to buy homes of their dreams.
Repo rate is the rate at which RBI lends the money to the banks. If the repo rates are lowered, that means that the banks can offer loans at lower rates.
To ease the liquidity in the sector, the government will also infuse Rs 20,000 crore into the housing finance companies. The Finance Minister also said that the government is holding consultations with the stakeholders to provide relief to the home buyers of the projects that are stuck in the legal battle or have been waiting long for the project to get completed.
Due to weak inflation and low growth, the RBI bought down the repo rate by 35 basis points, bringing it down to 5.4 percent, a step that will lower the cost of home loan rates. This is the fourth consecutive reduction in the basis points by the RBI since December 2018.
The real estate sector of the country is suffering from lower sales and high inventory. The reduction in the home loan rate will prompt the home buyers to take the step in that direction and invest in the home loan. The previous reductions by the RBI did not affect the home buyers or the real estate. The banks must pass the advantage of the cuts to the borrowers. The real estate sector is high cost-sensitive, and the demand will only pick up if the buyers are getting the benefits that are meant to be passed to them.
Linking the repo rates to the home loan will directly benefit the loan borrowers. The move made by the government shows that they are making a constant effort to revive the real estate sector of the country and want people to buy homes of their dreams.
Repo rate is the rate at which RBI lends the money to the banks. If the repo rates are lowered, that means that the banks can offer loans at lower rates.
To ease the liquidity in the sector, the government will also infuse Rs 20,000 crore into the housing finance companies. The Finance Minister also said that the government is holding consultations with the stakeholders to provide relief to the home buyers of the projects that are stuck in the legal battle or have been waiting long for the project to get completed.
Due to weak inflation and low growth, the RBI bought down the repo rate by 35 basis points, bringing it down to 5.4 percent, a step that will lower the cost of home loan rates. This is the fourth consecutive reduction in the basis points by the RBI since December 2018.
How it benefits the home loan borrowers
After the RBI’s various repo rate reductions, some banks have reduced their MCLR rate. The move will bring down the EMIs that the home loan borrowers have to pay every month. Public lenders like State Bank of India and Punjab National Bank have the home loan interest rate at 8.4 percent while for private banks such as HDFC Bank and ICICI Bank, the home loan interest rate is at 8.6 percent.The real estate sector of the country is suffering from lower sales and high inventory. The reduction in the home loan rate will prompt the home buyers to take the step in that direction and invest in the home loan. The previous reductions by the RBI did not affect the home buyers or the real estate. The banks must pass the advantage of the cuts to the borrowers. The real estate sector is high cost-sensitive, and the demand will only pick up if the buyers are getting the benefits that are meant to be passed to them.
