Even though the Reserve Bank of India has kept the repo rate unchanged at 6.25 per cent, big-ticket housing loans over ₹75 lakh may get cheaper with the RBI reducing the risk weightage on home loans to 50 per cent from 75 per cent.
“Considering the importance of the housing sector and given its forward and backward linkages to the economy, it has been decided as a counter-cyclical measure, to reduce the risk weight on certain categories. It has also been decided to reduce the standard asset provisioning on such loans,” the RBI said in its announcement.
Several banks have already undertaken rate cuts for new borrowers.
Jaxay Shah, President, CREDAI, the apex body of developers, said, “While the RBI has kept the repo rate unchanged, we welcome their move of softening the risk weight on home loans. This measure, along with lowered inflation figures as per earlier projection, will definitely augur well for the growth of the real estate sector.”
Ashwin Sheth, CMD, Sheth Corp, notes that “although the SLR was cut by 50 basis points to 20 per cent, it will certainly instil more liquidity into the banking system which will indirectly help banks to lend more money. Housing loans possibly will get cheaper as provisioning requirements get reduced.
“. Also, now with the implementation of the RERA Act, we can expect to witness positive reforms and sales growth in the sector. It will make real estate deals more transparent and fair to the buyers, increasing their confidence.”
Beginning April 1, 2016, home loan rates have been linked to the marginal cost of funds-based lending rate (MCLR). By reducing the spread, even without a change in the MCLR, home loan rates effectively come down.
Anshuman Magazine, Chairman – India and South East Asia, CBRE, said, “The reduction in the statutory liquidity ratio (SLR) by 50 base points to 20 per cent would help provide more liquidity to banks. This could prove beneficial for prospective home buyers with the expectation that lending institutions could further lower the interest rates on loans.”
Surendra Hiranandani, CMD, House of Hiranandani, says, “The RBI maintained status quo on interest rates for the fourth time in a row, but lowered its inflation forecast for the current fiscal. We feel that the central bank decided to wait for the July 1 roll-out of GST and assess the impact of the new indirect tax regime on inflation before tinkering with the policy rates.”
Shishir Baijal, CMD, Knight Frank India, said, “Considering the benign inflation numbers, we expected the RBI to adopt a growth-inducing dovish monetary policy unlike its hawkish stance witnessed in the previous review. With tamed inflation, uptick in industry sentiments and a good monsoon forecast the need of the hour is to embrace a monetary policy that propels growth.”