9 Sep 2014

New home loans may get cheaper

Banks with a higher share of long-term infrastructure loans and mortgage loans stand to benefit the most as the new norms would allow them to lower interest rates for such loans without compromising on spreads.


There is good news for prospective home buyers. Home loan rates are expected to come down for new borrowers in the near term. This is because the Reserve Bank of India (RBI) has recently allowed banks to raise long-term funds through bonds for lending to affordable housing and infrastructure sectors.
The funds collected by banks through these bonds will be exempted from cash reserve and liquidity requirements. The new norms have been announced by the RBI following announcements made in the Budget by Finance Minister Arun Jaitley. This move will help to address their asset-liability mismatches.
Banks with a higher share of long-term infrastructure loans and mortgage loans stand to benefit the most as the new norms would allow them to lower interest rates for such loans without compromising on spreads. Read More...

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