Your home loan EMIs are set to get lower

Your home loan EMIs are set to get lower

If the entire rate cut gets transmitted to borrowers your EMI will reduce by almost Rs1000

IndiaToday.in
  • Apr 05, 2016,
  • Updated Apr 07, 2016, 1:27 PM IST

Your EMIs are set to get lower with Reserve Bank of India cutting the repo rates by  25  basis points from 6.75 per cent to 6.5 per cent. If the entire rate cut gets transmitted to borrowers,  your EMI will reduce by almost Rs1000, assuming a home loan of Rs50,00,000 for the period of 30 years at 9.4%.

The central bank had last cut its short-term lending rate in September by 50 basis points to 6.75 per cent. Cumulatively, in 2015 the repo rate was cut by 1.25 per cent. In the past banks did not transfer the entire benefits to borrowers despite being asked by the Reserve Bank of India on several occassions. Experts say with banks started moving towards Marginal Cost-Based Lending Rate (MCLR), a higher cut by banks is expected this time. Recently, interest rate of post office schemes were also lowered so that banks would be able to cut their deposit rates. With banks now in a better position to cut deposit rates, lending rates are expected to move in tandem.

RBI has also reduced the  minimum  daily  maintenance  of  the  cash  reserve  ratio  (CRR)  from  95  per  cent  of  the  requirement  to  90  per  cent  with  effect  from  the  fortnight  beginning April 16, 2016. The real estate industry has welcomed the rate cut citing the move would provide a fillip to the property market, which has been a story of slowdown, inventory overhang and late deliveries of the project.

Shishir Baijal, Chairman and Managing Director, Knight Frank (India) Pvt. Ltd, says, "A 25 bps cut in policy rate is extremely encouraging and will definitely provide a huge fillip to the real estate industry that is currently facing a tough time. We hope that the banks will pass on the benefit to the consumers. This news augurs well for the sector that has also witnessed the passage of the real estate regulation bill and REIT. With inflation under control and an expected normal monsoon this year, we look forward to a continued accommodative stance by the Reserve Bank of India."

 

Read more!
RECOMMENDED