New Delhi: Much to the expectations of market and analysts, the Reserve Bank of India decided to reduce the repo rates by 25 bps to 6 percent. This was for the second time this year that the Central Bank reduced key interest rates.
Home loan borrowers may not see much meaningful or immediate interest rate relief. Banks have not transmitted earlier MPC rate cuts to borrowers because of higher funding costs, pressure on net interest margins, higher NPAs, and a cautious lending climate.
If banks do pass on the benefits of the last two rates cuts, it will be a boost to homebuyers, particularly for those eyeing affordable housing. Many first-time homebuyers who had been hesitating to take the plunge may make their move if home loan rates reduce.
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