About a dozen banks have already aligned their lending rates with the repo rate of RBI.
Homebuyers have said that Reserve Bank of India has fulfilled their main demand by asking banks to link all new floating-rate loans for housing to specified external benchmarks, including repo, for faster transmission of reduction in interest rate to borrowers from October 1.
In a set of recommendations presented to FM Nirmala Sitharaman in August, homebuyers had apprised the minister of banks not passing on the benefits of reduced interest rates to buyers.
“Presently, banks/FIs have a system of increasing the interest rate on home loans, taken on floating basis, whenever there is an increase in the rate, however, in case of reduction in rates banks do not reduce the interest until applied for by the buyer. This is a classic case of unfair trade practices,” buyers had said.
“This is very positive development for all homebuyers that the government is receptive of the suggestions given by us during our interaction with the finance minister and the same has been acted upon by RBI now. This will certainly ensure fair play and homebuyers will now be saved from having their tenure increased following the rise in interest rates. This will also help some homebuyers plan for a second house since the government has now provided incentives for it in the Budget.