Home loans interest rates may come down: Analysts
By Joseph Samson
Jan 14, 2013
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With the Reserve Bank of India's monetary policy review of the third quarter scheduled to be released at month end, speculations are rife among industry analysts about a reduction in a key policy rate by RBI, which could trigger cuts in home loan rates by banks and financial institutions.

It should be noted that the RBI's key policy rates such as repo rate and reverse repo rate are treated as indications by financial institutions in fixing their interest rates on loans and advances.

Analysts expect that given the reduction in high inflationary conditions, plus, the pressure to reduce key policy rates on RBI from several quarters may lead the central bank to cut policy rates in the next policy review.

This reduction will enable banks and financial institutions to lower their lending rates on all segments such as home loans, loans to traders, car loans etc.

It is also reported that some banks have already started slashing their loan rates in expectation of a rate cut by RBI. In addition to low interest rates, some banks have also reduced their miscellaneous charges on loans such as processing fees etc in anticipation of this rate cut.

Since, multiple rate cuts are expected from the RBI throughout this fiscal, borrowers should opt for home loans with floating interest rates over fixed rates to reap in the benefits of reduced rates.

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