The recent decision of the apex bank to keep the rates on hold- has faded the hopes of home and car loan EMIs to drop down. At present the majority of bank provides home loan at the rates in the range of 10.10% - 10.75% and car loans in the range of 10.9% to 13% for 7 years.
Repo rate the rate at which RBI lends to the bank has been kept unchanged at 8%. The base rate of most of the bank lies in between 9.8% and 10.5%. RBI governor Mr. Rajan stated that RBI will not keep the rates on hold more than is necessary. The cut in SLR will help banks realign their balance-sheets and meet the demands of the economy.
No one is sure about the rates, bankers are also doubtful regarding the rates, whether interest rates would fall before the calendar year. Most banks are lending almost at base rate for various products, especially home loans, and there can be no room to further cuts even for select products. With no changes in the rates by the RBI the overall cost of funds of banks will remain elevated. There are very less chances of the Home and auto loan EMIs to go down by this year.