Home Loan Interest Rate At Multi-Year Low, As RBI Repo Rate Remains Unchanged

 The Reserve Bank of India (RBI) has opted to keep the repo rate at 4% and the reverse repo rate at 3.35 percent, while keeping a 'accommodative' policy stance, due to the spread of the Omicron variant. The RBI has kept the status quo for the ninth time in a row, notwithstanding the current uncertainty about continued growth.

The interest rate on a house loan is directly influenced by the RBI repo rate. When the Fed reduces the repo rate, it lowers the cost of borrowing for banks, allowing them to pass the savings on to customers.

"The fact that repo rates have remained 'unchanged' is good news for house loan borrowers because floating retail loan rates, which are closely tied to external benchmark repo rates, will remain at historic lows." "A continuance of this low-interest rate regime improves the overall affordability climate for some time longer and is extremely welcome," says Anarock Group Chairman Anuj Puri.

The Reserve Bank of India (RBI) directed banks to transition to an external lending benchmark in 2018 so that borrowers might benefit from policy changes. Banks have been using repo rate-linked lending since October of this year. The majority of banks currently provide house loans that are tied to the RBI's repo rate. As a result, any changes in the repo rate are clearly reflected in the EMI outgo for borrowers.

The low interest rates on house loans that are now in place are likely to alter. "While the window of opportunity for homebuyers to take advantage of low-interest rates has been extended for a while longer, it is unlikely to last much longer—repo rates will rise sooner or later," adds Puri.

Positive For Real Estate Sector

The'status quo' comes as a respite for the real estate sector at a time when the market was expecting an increase in the reverse repo rate and a change in the central bank's attitude to 'neutral' as a precursor to future rate hikes. "In the absence of particular demand-side initiatives in Budget 2022-23, potential homebuyers can continue to benefit from lower house loan interest rates, which are here to stay for the time being," says Ramesh Nair, Colliers' CEO-India and managing director-market development, Asia.

Current Home Loan Rates 

The bulk of lenders currently provide home loans with interest rates starting at roughly 6.5 percent. According to information accessible on the lenders' websites, some of the lenders offering house loan rates are State Bank of India (6.65%), HDFC (6.7%), Bank of Baroda (6.5%), and ICICI Bank (6.7%). These are approximate rates; the actual rates offered by the lender will be determined by a variety of factors.

"After a disappointing Budget in terms of real estate, the status quo on policy rates was the last thing anyone expected. "The accommodative stance must remain for some time because the current interest rate on home loans of less than 7% per year is a crucial element for home purchasers when making a decision to buy a property," says Saransh Trehan, MD, Trehan Group.

Existing borrowers who took loans before October 2019 can keep their loans tied to the Marginal Cost of Funds-Based Lending Rate (MCLR) or move to the Repo Linked Lending Rate (RLLR) (RLLR). However, before making the transfer, one should weigh the costs and benefits. One could wait a few months to see if a clear picture of interest rate movement emerges. Based on your profile, you could choose a lender that offers a low rate of interest.

Conclusion

There's no need to be discouraged if your personal loan application is turned down. To boost your chances of loan approval, simply work on improving your credit report and following the methods outlined above. Once you've completed this checklist, you're ready to submit your personal loan application.To find about the best pricing and deals, call our toll-free number +91-9477079053. They'll help you in every way they can. Please contact me at Best Home Loan In India if you have any more. 

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