Financial advisors and home loan providers feel it may be wise to go ahead and seal the deal instead of waiting, unless you are planning to go in for a fixed rate loan.
Are you planning to buy a house and are confused whether to wait for your home loan provider to reduce lending rates in the wake of rate-reduction signals from the Reserve Bank of India or to just go ahead finalise the purchase instead of waiting?
Financial advisors and home loan providers feel it may be wise to go ahead and seal the deal instead of waiting, unless you are planning to go in for a fixed rate loan.
“There is a widespread feeling that transmission of rate cut signals from the Reserve Bank of India will be happening much faster than earlier. If a home buyer is going a floating-rate loan he or she should go ahead. This is because the benefit of the lower interest rate will be passed on by the lender in any case. However, if the deal is for a fixed-rate loan, it is better to wait since interest rates may fall further as they in a downward slope,” financial planner Anil Rego, CEO and founder, Right Horizons, told FeMoney.
Rego said he would advise borrowers to go for floating rate loan in the current scenario.
Banks and housing finance companies are expected to reduce home loan rates in the wake of Reserve Bank of India Governor Raghuram Rajan announcing a 25 basis points reduction in the repo rate to 6.5 per cent, the lowest in 5 years.
The RBI itself has expressed confidence that lender would pass on the lower rates to borrowers soon. “There is a holistic view this time, there is a rate cut, there is liquidity framework, and Marginal Cost of Funds based Lending Rate (MCLR) has also become operational from April 1. We are quite confident that with combination of all these factors transmission would be much more effective,” RBI Deputy Governor S S Mundra said a day after the credit policy.
Harshil Mehta, CEO, Dewan Housing Finance (DHFL) said though it was certain lenders would lower rates, buyers should not defer purchase decision. “The time for buying your dream home is now,” he said.
