Housing finance will be cheaper in Q1 as RBI cuts rate

By Accommodation Times Bureau

In the first quarter of 2012 home loans are likely to come down as Reserve Bank of India on Tuesday cuts its benchmark rates, this move is widely expected by banks. Majority of banks is expecting the RBI to cut its repo rate for the first time in three years to improve business sentiment. On the other hand money lenders is also expecting that through cut in cash reserve ratio (CRR) central will infuse liquidity to make up for the rupees it drains out while selling dollars to banks.
The current repo rate is 8.5percent is the rate that banks pay for borrowing overnight money from apex bank. However, banks have been consistently borrowing around Rs 80,000 crore to Rs 1 lakh crore, several money lender anticipates the overnight facility is becoming prime source of funds. If the repo rate is reduced by 0.25%, the banking system will save around Rs 250 crore.

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