Expect Home Loan interest rates to be reduced to 7-8 per cent

By Nikita Parekh

image of interest cutWhat if home loan interest rates are reduced to 7-8 per cent from the current rate of interest i.e. 10-14 per cent? You will be thinking is that possible? Yes, it seems to be possible after Union Minister for Urban Development, Housing & Poverty Alleviation M Venkaiah Naidu, said, that the NDA government has decided to bring the ‘infra and housing finance’ in the category of priority sector lending between 7 to 8 per cent and asked the banking and housing secretary to workout modalities.

While announcing the NDA’s plans to categories infra and housing finance sector in priority sector Naidu elaborated their plans and said, “That the Ministry Urban Development, Housing & Poverty Alleviation has made a pre budget representation to this effect to the finance ministry to push for softer interest rate regime for housing and infra projects.”

Government is heading towards implementation of their plans, they have asked the housing and banking secretary would meet to workout modalities for it so that a detailed proposal is sent to RBI to make sure that housing and infra financing is made available at the interest rates of between 7 to 8 per cent as prevailed during the previous NDA regime Vajpayee, the Minister pointed out.

As per a Reserve Bank of India (RBI) circular of February 2014, priority-sector lending is now confined to housing loans of up to Rs.25 lakh to individuals in metropolitan centres with a population above ten lakh, and Rs.15 lakh in other centres for purchase or construction of dwelling units per family. Setting a priority for these sectors is meant to ensure timely and cheaper credit to them.

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