Reserve Bank of India (RBI) has raised the repo rates after more than 4 years by 25 basis points, which will result in making home loans and other loans costlier because of tightening in the interest rates, but on the other hand RBI also has revised the housing loan limits for priority sector lending (PSL) from existing Rs. 28 lakh to Rs. 35 lakh, which will reduce the interest rates on home loans because of the increase in the subsidy.
According to the policy decision, the revision of housing loan limits from existing Rs 28 lakh to Rs 35 lakh in metropolitan centers, and from existing Rs 20 lakh to Rs 25 lakh in other centers are eligible on the overall cost of the dwelling unit, if it does not exceed Rs 45 lakh in the metropolitan centre and Rs 30 lakh at other centers. It is basically to boost the Economically Weaker Sections and Lower Income Groups for the low-cost housing.
You may go through the below figure to understand it better:
The experts of Real Estate put their views on increasing the limit by RBI they believe first-time home buyers who are looking to buy properties in the affordable segment will get the benefit and it would be a big boost for them. The home buyers will now get the subsidy benefits of Rs 2.68 lakh from the central government under schemes like Pradhan Mantri Awas Yojna and will owe a house in the metropolitan city, positively.
RBI’s decision would increase market share because banks will keep the rates lower on small ticket home loan segment.
“The decision to hike the Repo rate by 25 basis points may lead to suppressed growth in the Indian real estate sector which has shown substantial resilience over the last 18 months.” Jaxay Shah, President, CREDAI National, said. He further said about ‘Housing for all by 2022’ that when the banks will provide lower rates, it will enable the sector to spearhead the growth of the Indian economy and boost up the Indian realty.
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