Since the Reserve Bank of India (RBI) reduces the Repo rate on Wednesday with 25 basic points, the EMIs for housing loans will fall. In the past two months, RBI has reduced the Repo with a total of 50 basic points. In February, RBI reduced the benchmark percentage of 6.5 percent to 6.25 percent.
That is why the interest rates for home loans, which are linked to the MCLR and EBLR, can be taken. Before 1 October 2019, home credits for floating speeds were linked to the MCLR, ie marginal costs of credit rates. This means that the interest rates on housing credits go up or down based on the marginal costs with the deposit rates, repo rates, operating costs and the costs for maintaining the Cash Reserve Ratio (CRR).
With effect from 1 October 2019, home credits for floating speeds are linked to external benchmarks, where the repo speed is most common. Other benchmarks to which the housing loan of the floating speed can be linked are the proceeds from the treasury letter and other benchmarks.
So, your EMI’s housing loan will probably fall if one of the following happens:
I. Your housing loan is linked to the external bench market rate (especially the REPO rate).
Ii. Your home credit is linked to the marginal costs of the loan interest (MCLR).
Degree of autumn
Although the bank regulator has reduced the REP rate with a total of 50 basic points in the last two MPC meeting, it is not clearly passed on how much of this cut to the consumer. Banks can decide in the extent to which this cut can be passed on to the consumer.
Even if banks do not pass on the entire benefit of 50 basic points, some benefits will probably be passed on.
Other loans
In the meantime, all other loans with fixed interest rates will of course not fall. These usually include personal loans, which are isolated from the repo speed movement. These are generally short -term loans given at a fixed interest rate.
Experts believe that the speed reduction will lead to economic growth through greater transfer.
“We expect the monetary policy to support greater transmission to help economy grow in the current uncertain global environment. We expect market rates to remain well supported with 10-ins continue to trade in 6.40% -6.60% range, short-tartas. Trade in the Current Range After a Sharp Rally of 75-100 BPS over the Last One Month, “Says Amit Somani, Deputy Head-fixed Income, TATA Asset Management.
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