Interest rates may increase after Prabhakar Sinha raised 25 basis points in the repo and reverse repo rate by the Reserve Bank of India . Due to this , all types of loans including home loans can be expensive. However, in the priority sector lending, the interest rate on home loans up to Rs 35 lakh can be reduced by increasing the housing loan limit to 35 lakhs instead of 28 lakhs. The central bank has raised the repo rate by 6% and the reverse repo rate to 6.25%
Taking a policy decision, the RBI has taken an encouraging step in the low-cost housing sector. The central bank has increased the housing loan limit from Rs 28 lakh to Rs 35 lakh for weaker economic class. This limit is for metro cities, while in other centers the limit will now be Rs 25 lakh instead of 20. Anuj Puri, associated with ANAROCK Property Consultants, said that raising the limit would be of great benefit to first-time home buyers, who are looking for affordable houses.
Under the Central Government’s Pradhan Mantri Awas Yojana, subsidy of Rs 2.68 lakh in loans has made it easier for common people to make their dream of housing in metro cities a reality. About 40 per cent of loans from banks are given to micro enterprises, weaker sections and agriculture sector. Although the default rate in these sectors is quite high. In such a situation, banks can move towards priority sectors where the default rate is low.
Under the Central Government’s Pradhan Mantri Awas Yojana, subsidy of Rs 2.68 lakh in loans has made it easier for common people to make their dream of housing in metro cities a reality. About 40 per cent of loans from banks are given to micro enterprises, weaker sections and agriculture sector. As compared to these sectors, the default rate is very low in loans between Rs 10 lakh and Rs 35. However, bankers say that due to RBI’s decision, banks can reduce the loan on small home loans and due to this, their share in the market can increase.
