New Delhi, December 6 (IANS). The decision of the Reserve Bank of India to reduce the repo rate by 25 basis points is expected to boost housing demand. Home loan rates may drop to levels seen during the Corona pandemic.
Media reports claim that borrowers can benefit from a 25 basis point reduction in home loan interest rates. Currently many public sector banks are offering home loans at the rate of 7.35 percent, which is expected to be 7.1 percent after the RBI decision. These include Union Bank, Bank of India and Bank of Maharashtra.
According to the analyst, after the 0.25 per cent discount on a home loan of Rs 1 crore for a tenure of 15 years, the EMI per month will come down to Rs 1440.
Bankers say that the new loan rate will be 7.1 percent, so lenders will have to drastically cut deposit rates or revise interest rates on the benchmark. This will cause new borrowers to pay more than existing floating-rate customers.
Banks’ net interest margins are likely to decline unless deposit rates come down, while NBFCs are likely to benefit immediately from lower funding costs.
Analysts say that RBI’s neutral stance and its open market operations will maintain adequate liquidity in the purchase system and will be helpful in passing on the benefits of interest rate cuts to customers.
RBI introduced open market operations purchase scheme of Rs 1 lakh crore and 3-year USD/INR buy-sell swap of $5 billion, which is expected to infuse liquidity of about Rs 1.45 lakh crore.
Announcing the monetary policy decisions, RBI Governor Sanjay Malhotra said the MPC voted unanimously to cut interest rates to boost growth in the economy.
–IANS
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