loan – FindMyProperty

RBI hiked repo rate, the rate at which the central bank lends short term money to commercial banks, by 25 basis points (0.25 per cent) to 6.50 percent. This is expected to lead to higher interest rates on housing, auto and other personal loans. This is first time in nearly five years that RBI has hone for a back to back hike, having increased repo rate by 25 bps to 6.25 percent in its last policy meet in june. Last time RBI had increased the repo rate consecutively in 2013. Trade tensions, crude oil prices, poor economic activity, rising retail inflation have been considered as the primary factors behind the hike in repo rate.

I think that hike in repo rate will impact the real estate sector as the revised rate would result in costlier EMIs for the home loan.

The Reserve Bank of India made a decision to increase the limits on loans for PSL (Priority sector lending) which may assist in the first-time homebuyers get greater amounts of loans at better terms which in turn may boost the sales of Affordable Houses.

RBI revised the housing loan limit for PSL from Rs 28 lakh to Rs 35 lakh in cities with a minimum population of 10 lakh and from Rs 20 lakh to Rs 25 lakh in other cities. This is on condition that the overall cost of the house does not exceed Rs 45 lakh for metropolitan cities and Rs 30 lakh for other cities.

The RBI has also raised concerns over rising minor crimes and suggests at lesser loan to value of the property.

Reduced home loan interest rates and necessary impetus by the government has helped to boost sales of the affordable housing sector. The housing sector has been supported by the government through lower GST rates, affordable housing fund, increased duration of loans CLSS of Pradhan Mantri Awas Yojana (PMAY) and extended income tax benefits to apartments of maximum carpet area of 645 sq ft.

According to Khushru Jijina, MD of Piramal Finance & Piramal Housing Finance the decision would up the sales of affordable houses which will in turn help in economic growth.

The rating agency CRISIL is of the view that the decision will allow most of the housing loans given by banks to qualify for PSL which would be positive for the banks. CRISIL also added that as of April 2018, 37% of the housing loans given by the banks qualified for the PSL.