Borrowers can expect their home loan interest rate to decline by 25 bps to about 7.1 per cent as several public sector banks, including Union Bank, Bank of India and Bank of Maharashtra, currently offer home loans at 7.35 per cent, according to multiple media reports.
On a Rs 1 crore home loan for 15 years, a 0.25 percentage reduction would lower the EMI by roughly Rs 1,440 per month, analysts said.
According to bankers, as the new loans are to be priced at 7.1 per cent, lenders will have to sharply cut deposit rates or revise spreads over the benchmark, leaving new borrowers to pay more than existing floating‑rate customers.
Banks are set to see a compression in net interest margins until deposit rates ease, while Non‑Banking Finance Companies stand to benefit immediately from lower funding costs.
Analysts said that the RBI's neutral stance and its open market operations purchases will keep ample liquidity in the system and help transmit rate cuts to the grassroots.
RBI unveiled plans of Rs 1 trillion of open market operations purchases and a 3-year USD/INR buy-sell swap of $5 billion, which is expected to infuse about Rs 1.45 trillion of liquidity.
RBI MPC members unanimously decided to reduce the repo rate by 25 basis points to 5.25 per cent from 5.5 per cent earlier to spur growth in the economy.
Analysts said that the RBI's decision to cut the repo rate is a move that uses the monetary space created by low inflation to stimulate consumption and strengthen the growth cycle.
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